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FOREIGN  RIGHTS  AND 
INTERESTS  IN  CHINA 


BY 


WESTEL  W.  WILLOUGHBY 

Professor  of  Political  Science  at  the  Johns  Hopkins  University: 
Legal  Advisor  to  the  Chinese  Republic,  1916-1917. 


BALTIliOBE,  MABYLAITD 

THE   JOHNS   HOPKINS    PRESS 
1920 


Copyright  1920  by 
The  Johns  Hopkins  Pbess 


J.    H,    FtJBST    COSIPANT, 
BAXTIHORE 


College 
Library 


1570 


PREFACE 


The  purpose  of  this  volume  is  to  provide  a  statement  of  the 
rights  of  foreigners  and  the  interests  of  foreign  States  in  China 
as  they  are  to  be  found  stated  in  treaties  with  or  relating  to  China 
or  in  other  documents  of  an  official  or  quasi-official  character. 
Viewed  from  the  other  side,  the  account  will  exhibit  the  limitations 
under  which  the  Chinese  Government  is  compelled  to  act  not  only 
with  regard  to  matters  of  international  obligation  but  as  to  matters 
which,  in  countries  more  fortunately  circumstanced,  are  of  purely 
domestic  concern. 

Whether  the  purpose  of  the  volume  has  been  satisfactorily 
achieved,  the  reader  will  determine,  but  that  there  is  a  pressing 
need  for  a  work  that  will  furnish  an  explanation  and  definite 
statement  of  the  rights  and  interests  which  the  Treaty  Powers  and 
their  nationals  have  obtained  in  China,  few  will  question.  Anyone 
who  has  been  in  China,  or  has  had  business  interests  with  that 
country,  or  has  sought  to  gain  an  understanding  of  the  conflict  of 
national  interests  in  the  Far  East,  will  testify  to  the  urgency  of 
this  need.  This  is  not  to  say,  however,  that  there  are  not  already 
books  which  deal  with  many  of  these  topics.  There  are  such 
treatises,  and  among  them,  especially  deserving  mention,  are: 
H.  B.  Morse's  The  Trade  and  Administration  of  China,  2d  ed., 
published  in  1913,  and  his  three  volumes  on  Foreign  Relations  of 
the  Chinese  Empire,  183^-1911;  V.  K.  Wellington  Koo's  The 
Statiis  of  Aliens  in  China,  published  in  1912;  T.  E.  Jemigan's 
China  in  Law  and  Commerce,  published  in  1905 ;  T.  W.  Overlach's 
Foreign  Financial  Control  in  China,  published  in  1919 ;  and  M.  T. 
Z.  Tyau's  The  Legal  Obligations  Arising  out  of  Treaty  Relations 
between  China  and  Other  States,  published  in  1917.  From  these 
volumes  the  author  has  derived  the  greatest  aid.  It  will  appear, 
however,  that  he  has  explained  many  matters  which  are  not  dis- 
cussed by  these  earlier  writers,  and,  of  course,  there  has  been 
opportunity  to  deal  with  the  important  developments  of  the  last 
few  years. 

iii 


1320612 


iv  PREFACE 

SuflBcient  has  been  said  to  indicate  that  this  volume  makes  no 
claim  to  describe  present  political  conditions  in  China,  nor,  upon 
the  side  of  international  law  and  diplomacy,  to  estimate  the  ethical 
character  or  practical  wisdom  of  the  policies  which  the  several 
Treaty  Powers  have  pursued  in  their  dealings  with  China.  But 
the  volume  will  have  failed  to  achieve  one  of  its  purposes  if  it 
does  not  supply  information  from  which  the  reader  can  obtain  an 
understanding  of  what  these  policies  have  been  in  the  past,  and  be 
aided  to  form  an  intelligent  judgment  as  to  what  they  should  be 
in  the  future.  As  regards,  however,  this  last  matter,  weight  must 
be  given  to  matters  which  are  not  discussed  in  the  present  volume. 
These  mattert  relat«  to  existing  domestic  conditions  in  China,  and, 
especially,  to  the  question  whether  it  is  likely  that  China  will  be 
able,  without  foreign  aid,  to  re-establish  order  in  her  household 
and  to  place  her  administrative  services  upon  an  e£Bcient  working 
basis.  Also  must  be  considered  the  manner  in  which  the  several 
Powers  have,  in  practice,  exercised  their  rights  or  claims  to  special 
interests  in  China,  and  weight  must  be  given  to  the  dominant 
political  principles  and  ambitions  of  the  Powers  concerned.  Par- 
ticularly is  it  necessary  that  Japan's  relation  to  China  should  be 
viewed  in  the  light  of  these  facts.  The  author  hopes  that  he  may 
later  find  time  to  prepare  another  volume  in  which  these  questions 
can  be  discussed.  He  has  thought  it  advisable,  however,  not  to 
extend  the  scope  of  the  present  volume  beyond  what  has  been 
indicated. 

A  further  word  should  be  said  as  to  the  mode  adopted  for  pre- 
senting the  facts  dealt  with.  The  policy  has  been  pursued  of 
quoting  liberally  from  the  treaties  and  other  official  papers.  This 
has  required  somewhat  more  space  than  a  summary  in  the  author's 
own  language  would  have  demanded,  but,  it  is  believed,  the  result 
will  be  satisfactory  to  the  reader  who  will  thus  be  made  certain  as 
to  the  actual  language  of  the  documents  in  question  and  be  enabled 
to  judge  for  himself  whether  the  conclusions  stated  in  the  body  of 
the  text  have  been  properly  drawn.  In  result,  the  student  will 
have,  as  it  were,  a  handbook  to  the  international  commitments  of 
China,  and,  in  most  cases,  be  saved  the  necessity  of  resorting  to 
the  volumes  in  which  these  agreements  are  set  out  in  full.  Of 
these  collections  of  China  treaties  there  are  several,  the  titles  and 


PREFACE  T 

scope  of  which  are  listed  in  the  note  which  follows.  It  will  be 
found  that  by  far  the  greatest  use  has  been  made  of  Mr.  Mac- 
Murray's  collection,  and,  in  fact,  much  of  whatever  merit  the 
present  volume  may  possess  is  due  to  the  fact  that  Mr.  MacMurray 
has  kindly  made  accessible  to  the  author  the  galley  proofs  of  his 
valuable  compilation.  All  persons  interested  in  the  matter  of 
treaties  with  or  relating  to  China  will  owe  a  great  debt  of  gratitude 
to  Mr.  MacMurray  for  the  painstaking  care  with  which  he  has 
made  his  collection. 

Hon.  Paul  S.  Reinsch,  former  American  Minister  to  China,  and 
Dr.  Stanley  K.  Hombeck  have  kindly  spared  the  time  to  read  the 
proofs  of  the  present  volume,  and  have  made  suggestions  and  cor- 
rections which  have  been  of  the  greatest  value  to  the  author. 

w.  w.  w. 


COLLECTIONS  OF  TREATIES  AVITH  OR  RELATING 

TO  CHINA 


Sir  E.  Hertslet.  Treaties  between  Great  Britain  and  China 
and  Foreign  Powers.  3rd  Edition,  2  volumes,  revised,  London, 
1908.     (Cited  as  "Hertslet.") 

Volume  I  contains  the  texts  of  treaties,  1689-1907.  Only  treaties 
in  force  on  January  1,  1908  are  included,  and  where  clauses  of 
different  treaties  are  precisely  the  same  or  their  wording  practically 
identical,  they  have  been  given  but  once.  The  treaties  whose  texts 
are  given  are  gathered  into  three  groups:  (1)  Treaties  between 
Great  Britain  and  China,  1842-1907;  (2)  Treaties  between  China 
and  Foreign  Powers  other  than  Great  Britain,  1689-1907;  and 
(3)  Treaties  between  Foreign  Powers  and  between  Great  Britain 
and  Foreign  Powers,  respecting  China,  1896-1907. 

Volume  II  contains  acts  of  the  British  Parliament,  Orders  in 
Council,  and  Rules  and  Regulations  affecting  British  Interests  in 
China,  1855-1907,  and  Miscellaneous  Documents,  1877-1907. 
There  is  a  general  index. 

W.  F.  Mayers.  Treaties  between  the  Empire  of  China  and 
Foreign  Powers.    Shanghai,  1877. 

This  collection,  first  published  in  1877  and  for  a  time  out  of 
print,  was  revised  and  reissued  in  1897.  The  texts  have  not  been 
reproduced  with  conspicuous  accuracy,  and  the  collection  is  not 
now  of  considerable  value. 

W.  W.  RocKHiLL.  Treaties  and  Conventions  with  or  concerning 
China  and  Korea,  1894-1904.  Washington  (U.  S.  Government 
Printing  Office)  1904.    Cited  "  Rockhill." 

This  compilation  was  prepared  as  a  continuation  of  Hertslet. 
In  addition  to  the  formal  treaties,  the  texts  are  given  of  less  formal 
Declarations  and  Arrangements,  of  Mining  and  Railway  Conces- 
sions, and  of  some  other  miscellaneous  documents. 


PEEFACE  Yii 

W.  W.  EoCKHiLL.  Treaties,  Conventions,  Agreements,  Ordi- 
nances, Etc.  Relating  to  China  and  Korea.  October,  1904-January, 
1908.  Washington  (U.  S.  Government  Printing  Office,  1908.) 
Cited  as  "  Eockhill,  Suppl." 

This  is  a  Supplement  to  the  preceding,  covering  four  more  years. 

The  Maritime  Customs.  Treaties,  Conventions,  Etc.  between 
China  and  Foreign  States.  Two  volumes,  2d  Edition,  Shanghai, 
1917.    Cited  "  Customs  Treaties." 

This  excellent  collection,  published  by  the  Inspector  General  of 
the  Chinese  Maritime  Customs,  contains  not  simply  the  full  texts 
of  treaties  in  force,  but  all  those  entered  into  by  China  from  the 
first  one  of  which  there  is  a  record,  in  1689,  to  the  date  of  publi- 
cation. The  treaties  are  published  in  their  original  texts,  but 
usually  with  English  or  French  translations,  in  cases  in  ivhich  the 
originals  are  in  neither  of  those  languages. 

J.  V.  A.  MacMurray.  Treaties  and  Agreements  with  or  con- 
cerning China,  1894-1919.  Two  volumes.  The  Carnegie  Endow- 
ment for  International  Peace.  Washington,  D.  C,  1919.  Cited 
"  MacMurray." 

The  references  are  to  the  serial  numbers  of  the  documents,  it 
being  impossible  to  give  the  page  numbers,  as  the  collection  was 
only  in  "galley"  proof  at  the  time  the  present  volume  went  to 
press. 

These  recently  issued  volumes  now  provide,  for  the  period  cov- 
ered, the  most  valuable  of  all  the  treaty  compilations  relating  to 
China,  and,  wherever  possible,  will  be  cited  in  preference  to  the 
other  collections.  The  volumes  are  compiled  upon  substantially 
the  same  principles  of  selection  as  those  of  Eockhill's  two  volumes; 
the  documents,  however,  are  not  grouped  as  in  Eockhill  but  are 
arranged  in  strictly  chronological  order.  Valuable  notes  indicate 
the  relations  between  the  several  agreements,  and  an  excellent 
index  is  provided.  In  all  cases  the  English  text  or  translation  is 
given. 

Mr.  MacMurray  in  his  Introductory  Note  says :  "  The  under- 
lying principle  of  Mr.  EockhiU's  collection  was  his  appreciation  of 
the  fact  that,  with  the  Japanese  War,  China  entered  upon  a  new 


viii  PREFACE 

course  of  national  development,  the  history  of  which  is  to  be  read 
rot  only — nor  even  primarily — ^in  the  Treaties  and  other  formal 
international  engagements,  but  rather  in  the  arrangements  of 
nominally  private  character,  with  syndicates  or  firms  of  foreign 
nationality,  under  which  the  Chinese  Government  then  began  to 
incur  a  complex  and  far-reaching  set  of  obligations  and  commit- 
ments, in  which  the  financial  or  economic  element  is  often  merged 
indistinguishably  vrith  political  considerations."  Hence,  as  has 
been  already  noted,  in  Mr.  Eockhill's  volumes  are  to  be  found  the 
texts  of  many  mining  and  railway  concession  agreements.  This 
character  of  material  becomes  even  more  prominent  in  Mr.  Mac- 
Murray's  collection. 


•[■•OJlTi' 


CONTENTS 


PA«B 

Preface ; , i 

Collection  of  Treaties  with  or  Eelating  to  China * . . . .  ri 

CHAPTER  I 
Inteoduction 

Difficulty  in  Determining   China's   International   Commit- 
ments     3 

Many  Agreements  not  Ratified  by  the  Chinese  Parliament. .  5 

Most  Favored  Nation  Clause  in  its  Application  to  China. ...  8 

Chinese  Circular  of  1878 'll 


CHAPTER  II 

EXTEATERKITORIALITY    IN    ChINA 

Trade  Conditions  Prior  to  1842 13 

Basis  of  Extraterritoriality  in  China 16 

Origin  of  Extraterritoriality 18 

American  Treaty  of  1844 20 

Tientsin  Treaty  of  1858 22 

Extraterritorial  Jurisdiction  Summarized 23 

Controversies  between  Chinese  and  Treaty  Power  Nationals  25 

Koreans  in  Chientao,  Special  Status  of 26 

Extraterritorial  Courts 27 

Consular  Courts 28 

American  Courts  in  China 28 

American  Consular  Courts :  Statutory  Provisions 29 

The  United  States  Court  for  China 31 

His  Britannic  Majesty's  Supreme  Court  for  China 35 

The  Law  Enforced  in  the  Extraterritorial  Courts 41 

ix 


X  CONTENTS 

PAGE 

The  Law  of  Real  Estate  in  Extraterritorial  Courts 4G 

Sources  of  Law  for  American  Courts  in  China 48 

Foreigners   as    Plaintiffs   in    Chinese   Tribunals  — "  Mixed 

Courts  "  51 

Shanghai  International  Mixed  Court 55 

Status  of  the  Shanghai  Mixed  Court  Since  1911 59 

Mixed  Court  in  the  French  Settlement  at  Shanghai 64 

Arrests  by  Chinese  Officials 65 

Reform  of  the  System  of  Mixed  Courts 67 

Disadvantages  of  the  Extraterritorial  System  to  the  Chinese  70 
Disadvantages  of  the  Extraterritorial  System  to  Foreigners 

in   China 73 

Possible  Abolition  of  Extraterritoriality  in  China 75 

Argument  of  Chinese  Delegation  at  Paris 76 

Japanese  "  Police  Boxes  "  in  China 80 

Extraterritorial  Rights  in  Leased  Territories 87 

Appendix  A :   United  States  Statutes  Relating  to  Consular 

Jurisdiction 88 

Appendix  B :   Act  Establishing  the  United  States  Court  for 

China   90 


CHAPTER  III 

Foreign  Commerce  and  the  Rights  of  Foreign  Merchants 

IN  China 

Treaty  of  Nanking,  1842 103 

Tientsin  Treaties  of  1858 107 

Treaties  of  1902  and  1903 108 

Specific  Rights  of  Foreign  Merchants  in  China 110 

Treaty  Ports 112 

Ports  of  Call 115 

Limits  of  Treaty  Ports 115 

Peking  not  a  Treaty  Port 117 

Tariff   Rates 117 

Free  List  for  Importations 119 

Prohibited  Imports  of  Arms  and  Ammunition  and  of  Salt.  .  120 

Likin  and  Other  Transit  Taxes  upon  Exports  and  Imports.  .  120 


CONTENTS  li 

PAGE 

Destination  and  Consumption  Taxes 129 

Chinese  Stamp  Tax  on  Bills  of  Lading,  Etc 130 

Mackay  Treaty  with  Great  Britain,  1902 131 

Conclusion 133 

Maritime  Customs  Administration 135 

Present  Customs  Administration 139 

Tsingtau :   Customs  Service  at 141 

Dairen,  Customs  Administration  of 144 

Antung  and  Newchwang 14T 

Special  Arrangement  Eegarding  Trade  between  Korea  and 

Manchuria 148 

Russian  Frontier  Trade 148 

Frontier  Trade  with  Burma  and  Indo-China 149 

China  Desires  Abolition  of  Special  Frontier  Trade  Regu- 
lations      150 

Enforcement  of  Customs  Regulations 152 

Native   Customs 154 

The  Chinese  Post  Office 156 

CHAPTER  IV 
Inland  Navigation 

Inland  Steam  Navigation  Regulations  of  1898 161 

Yangtze  Regulations  of  1898 . .  . .' 163 

Revision  of  Rules  in  1902 164 

Foreign  War-Ships  on  Inland  Waters 166 

Foreign  Surveys  of  Chinese  Ports 167 

CHAPTER  V 

Patent  Rights,  Trade  Marks  and  Copyrights  and  Foreign 
Corporations  in  China 

Treaty  Provisions 169 

Copyrights 172 

Patents 173 

Trade-Marks   173 


xii  CONTENTS 

PAGE 

Vaseline  Case 176 

Trade-Marks  in  the  Consular  Courts 181 

Foreign  Corporations  in  China 181 

Foreign  Shareholders  in  Chinese  Corporations 185 

Taxation  of  Corporations 187 

Proposed  American  Law 188 

Revised  Regulations  of  1919  Affecting  the  British  Companies 

Act  180 


CHAPTER  VI 
Landholding  by  Foreigners  in  China 

Modes  of  Acquiring  Titles 195 

Landholding  in  Manchuria 19G 

Missionaries  in  China 197 

Missionaries  in  the  Interior 199 

Treaty  of  1903 200 

Status  of  Chinese  Converts  to  Christianity 203 

Secular  "Work  by  Missionaries 205 

^-  CHAPTER  VII 

Concessions  and  Settlements 

Foreign   Residential    Areas,    Settlements,    and    Concessions 

Defined 208 

Land  Transfers  and  Ownership  in  Concessions  and  Settle- 
ments     210 

China's  Sovereignty  not  Surrendered 211 

•Governing  Powers  in  Concessions 213 

Ijegal  Basis  of  Administrative  Ordinances 214 

Classes  of  Concessions  and  Settlements 217 

IJegation  Quarter  at  Peking 219 

Administration  of  the  Legation  Quarter 221 

Foreign  Garrisons  in  China 221 

Appendix  A :   Tientsin _ 223 

Appendix  B :  Shanghai 225 


CONTENTS  xiii 

CHAPTER  YIII 

Leased  Areas  pa9e 

Kiaochow ^ .  J .... . .  i . .  228 

Sino-German  Treaty  of  1898 233 

Liaotung  Peninsula 238 

Kuangchouwan   238 

Kowloon,  Mirs  Bay  and  Deep  Bay 239 

Weihaiwei 240 

Italy 242 

Extraterritorial  Rights  in  Leased  Territories 242 


CHAPTER  IX 

The  Open  Door  in  China  and  Guarantees  op  China's 
Sovereignty  and  Territorial  and  Adminis- 
trative Integrity 

The  "  Open  Door  "  in  China 245 

Secretary  Hay's   Circular   Letter 246 

Responses  of  Powers  to  Secretary  Hay's  Letter 248 

Repeated  Affirmations  of  the  Open  Door  Policy 251 

Affirmations  of  the  Open  Door  Policy  by  Treaties  Among  the 

Foreign  Powers 253 

Open  Door  and  Special  Interests 259 

Guarantee  of  China's  Sovereignty  and  Territorial  Integrity  261 

Significance  to  China  of  these  Guarantees 262 

Administrative  Integrity  of   China 264 


CHAPTER  X 
Spheres  of  Interest — French,  English  and  Russian 

Territorial  Losses  of  China 267 

Spheres  of  Interest  and  Spheres  of  Influence  Defined 270 

Implications  of  Sphere  of  Interest 273 


xiv  CONTENTS 

PAGE 

French   Sphere- 275  . 

British  Sphere 281 

Anglo- Russian  Agreement  of  1899 282 

Russian  Sphere — Manchuria 286 

Cassini  Convention 288 

The  Li  Hung  Chang-Lobanoff  Treaty  of  Alliance  of  1896 

Between  China  and  Russia 291 

Chinese  Eastern  Railway 292 

Russo-Chinese  Bank  Chartered. 296 

Port   Arthur-Harbin   Railway 297 

Railway  Guards  and  Political  Jurisdiction 297 

Development  of  Russia's  Aggressive  Policies  in  Manchuria . .  299 

Anglo- Japanese  Alliance  of  1902 301 

Japan  Declares  War  on  Russia 302 

Portsmouth  Treaty  of  Peace 303 

Russian   Political   Jurisdiction   in  North   Manchuria  since 

1905 305 

Similar  Question  Raised  by  Japanese  at  Mukden 309 


CHAPTER  XI 
The  Japanese  in  Manchtjbia 

Sino- Japanese  Treaty  of  December  22,  1905 311 

Antung- Mukden  Railway 312 

Secret  Protocols  to  the  Treaty  of  1905 312 

Hsinmintun-Fakumen  Railway 313 

Russo-Japanese  Agreement  of  1907 314 

Franco- Japanese  Understanding  of  1907 315 

Root-Takahira  Understanding  of  1908 315 

Secretary  Knox's   Plan   to   "  Neutralize "  the  Railways   in 

Manchuria 316 

Reply  of  Great  Britain 319 

Russian  Reply _ 320 

Secret  Russo-Japanese  Agreement  of  1899 322 

Japan's  Reply  to  Secretary  Knox's  Proposal 324 

Russian  and  Japanese  Pressure  upon  China 326 


CONTENTS  XV 

PAGE 

France  and  Great  Britain  Fail  to  Support  Secretary  Knox's 

Proposal 327 

Eusso-Japanese  Treaty  of  July  4,  1910 328 

Eenewal  in  1911  of  the  Anglo-Japanese  Alliance 329 

Japan's  Twenty-One  Demands  in  1915  upon  China 330 

Group  II — Original  Form 331 

Group  II — Revised 332 

Treaties  and  Notes  of  1915 336 

Comment  on  the  Foregoing  Demands,  Treaty,  and  Notes.  .  338 

Chengchiatun  Incident  and  Resulting  Japanese  Demands.  .  347 

Eusso-Japanese  Treaty  of  July  3,  1916 350 

Secret  Russo-Japanese  Military  Alliance  of  1916 352 

Additional  Railway,  Mining,  and  Other  Rights  in  Manchuria 

Acquired  by  Japan 354 

Hsinmin-Mukden  and  Kirin-Changchun  Railways 355 

Mining  and  Railway  Rights  Obtained  in  1909 356 

Five  Additional  Japanese  Railways  in  Manchuria 358 

Ssupingkai-Chengchiatun  Railway  Loan  Agreement 360 

Railway  Loan  Agreements  of  September  28,  1918 362 

Kirin-Hueining  Railway  Loan  Agreement 362 

Gold  Mining  and  Forestry  Loan 363 

South  Manchuria  Railway  Company 364 

Fushun  and  Yentai  Coal  Mines 367 

Other  Activities  of  the  South  Manchuria  Railway 368 

Authority  of  the  Government-General  of  Kwantung  Over  the 

Manchurian  Railways 368 


CHAPTER  XII 

Former  German  Eights  and  Interests  in  Shantung 

Eailway  Eights 371 

German  Mining  Eights  in  Shantung 376 

German  Commercial  and  Industrial  Preferential  Eights  in 

Shantung 377 


ivi  CONTENTS 

CHAPTER  XIII 
Japan's  Position  in  Shantung 

PAQB 

Count  Okuma's  Message  to  the  American  People. ........  381 

Japan's  Actions  in  Shantung 382 

Japanese  Deny  Obligation  to  Return  Kiaochow  to  China. . .  385 

Group  I  of  the  Twenty-One  Demands  of  1915 386 

China's  Reply 387 

Revised  Demands 389 

Resulting  Treaty  and  Notes 390 

Effect  of  China's  Declaration  of  War  Against  Germany. ...  391 

Agreements  of  September  24,  1918 393 

Japanese  Gain  Additional  Railway  Concessions  in  Shantung  394 

War  Participation  Loan 395 

China  at  the  Paris  Peace  Conference 396 

Secret  Engagements  of  1917  of  the  Entente  Powers  with 

Japan   397 

President  Wilson's  Position 400 

The  Treaty  of  Peace :  Shantung  Provisions 401 

The  Treaty  of  Peace :  German  Rights  and  Interests  in  China 

Other  Than  Those  in  Shantung 402 

China  Refuses  to  Sign  the  Treaty  of  Peace  with  Germany. .  405 

Japan's  Promise  to  Restore  Shantung  to  China 406 

President  Wilson  Corrects  Viscount  Uchida's  Version  of  the 

Agreement 407 

CHAPTER  XIV 

Other  Japanese  Interests  in  China 

Japanese  Sphere  in  Fukien 411 

Twenty-One  Demands  of  1915 411 

Yangtze  Valley  Railroads  and  the  Hangyehping  Iron  Works  414 

Demands  of  1915 415 


CONTENTS  xvii 

CHAPTER  XV 
Japan's  Political  Ambitions  in  and  Towards  China 

PAGE 

Group  V  of  the  Twenty-One  Demands 418 

Sino- Japanese  Military  Agreement  of  1918 422 

■      CHAPTER  XVI 

Japan's  "  Special  Interests  "  in  China — The  Lansing-Ishii 

Agreement 

The  Lansing-lshii  Agreement. .  * 429 

China's  Declaration  with  Regard  to  the  Lansing-Ishii  Agree- 
ment   431 

Comment  upon  the  Agreement _ . .  433 

Secretary   Lansing's  Testimony  before   the   Committee  on 

Foreign  Relations  of  the  United  States  Senate 437 

Conclusions  as  to  the  Scope  of  the  Japan's  "  Special  Inter- 
ests "  in  China 441 

Letters  of  the  Russian  Ambassador  at  Tokyo 445 

American  Note  of  June,  1917,  to  China,  and  Japan's  Attitude 

with  Regard  to  It 447 

CHAPTER  XVII 

Mongolia  and  Tibet 

Mongolia 451 

Russo-Mongolian  Treaty  of  1912 452 

Russo-Chinese  Understanding  of  1913 454 

Tripartite  Agreement  of  1915 455 

Outer  Mongolia  Cancels  Its  Autonomy 455 

Eastern  Inner  Mongolia 457 

Tibet _ 459 

Chinese  Turkestan    (Sinkiang) 462 


xviii  CONTENTS 

CHAPTER  XVIII 
Opium 

PASE 

Development  of  the  Opium  Question 4G3 

America  and  the  Chinese  Opium  Trade ,  468 

China  Prohibits  the  Smoking  of  Opium 469 

Anglo-Chinese  Agreement  of  1907 470 

International  Opium  Commission  at  Shanghai 471 

International  Opium  Conference  of  1911  at  The  Hague.  . . .  473 

Second  International  Opium  Conference  at  The  Hague,  1913  476 

Third  International  Opium  Conference  at  The  Hague,  1914.  477 

Paris  Treaty  of  1919 478 

Events  in  China.  Relating  to  Opium,  Since  1917 479 

Smuggling  and  Sale  of  Morphia  in  China  by  the  Japanese. .  480 

Persian  and  Turkish  Opium 481 

Bibliographical  Note 481 

CHAPTER  XIX 

China's  Foreign  Debts  and  Financial  Commitments 

Certain  Features  of  Chinese  Loans 483 

China's  Public  Debts  Classified 487 

AVar  and  Indemnity  Debts 488 

Franco-Russian  Loan  of  1895 488 

Anglo-German  Loan  of  1896 490 

Anglo-German  Loan  of  1898 491 

Boxer  Indemnities 493 

General   Governmental   and   Administrative   Reorganization 

Loans 494 

Currency  Loan  of  1911 494 

Crisp  Loan  of  1912 497 

The  Six  Power  Consortium 499 

Withdrawal  of  American  Banks  from  the  Cou'sortium 500 

The  Reorganization  Loan  of  1913 502 

Japanese  Advances  on  Reorganization  Loan 506 

Belgian  Loan  of  1913 506 


CONTENTS  xix 

PAGE 

Austrian  Loans  of  1912 507 

Lee,  Higginson  (American)  Loan  of  1916 508 

Chicago  Bank  Loan 508 

Japanese  Loans  of  1917-1919 509 

The  Proposed  New  Consortium 511 

Other   Loans 519 

Anglo-Chinese  Loan  of  1914 520 

Industrial  Loan  of  1913 520 

Banque  Industrielle  Loan  of  1914 530 

Kirin  Mining  and  Forest  Loan 521 

War  Participation  Loan 522 

Telegraph  Loan  of  1918 523 

Plague  Prevention  Loan 523 

Other  Loans _ 523 


CHAPTEK  XX 
Eailway  Loans  and  Foreign  Control 

Introductory 524 

Shanghai-Woosung  Eailway • 526 

Peking-Mukden   Line 526 

Anglo-Russian  Understanding  of  1898 530 

Peking- Kalgan    (Peking-Suiyuan)    Railway 531 

Shanghai-Nanking  Railway 532 

Peking-Hankow  Railway 535 

Chengtiiigfu-Taiyuanfu  Railway 537 

Peinlo  Railway • 538 

Chinese  Regulations  of  1898  for  Mines  and  Railways 538 

Canton-Kowloon   Railway . . , 539 

Tientsin-Pukow  Railv/ay 541 

Shanghai-Handhow-Ningpo  Railway 547 

Canton-Hankow  Railway 549 

Hukuang  Loan  and  the  Chinese  Revolution  of  1911 557 

Tao-Ching  or  Peking  Syndicate  Railway 559 

Projected  Railways  Since  1912 560 

Shasi-Shingyi    (Sha-Shing)    Railway 560 


XX  CONTENTS 

PAGE 

Siems-Carey  Concessions 562 

Shantung-Canal  Ini,provement  Loan 566 

Eailways  Owned  and  Operated  by  Foreign  Governments  or 

Interests 566 

Summary 568 


TABLES 

A.  Foreign    Loans    to    China    Classified    According    to    Their 

Security. 

B.  Domestic    Loans    of    China    Classified    According    to    Their 

Security. 

C.  Schedule  of  Chinese  National  Revenues. 

Index  587 


CHAPTER   I 

Intboduction 


From  the  standpoint  of  international  law  and 
diplomacy,  the  situation  in  China  is  complicated  in 
the  extreme.  Probably  nowhere  else  in  the  world  is 
there  such  a  mixture  of  territorial  rights  with  foreign 
privileges  and  understandings,  of  purely  political  engage- 
ments with  economic  and  financial  concessions,  of  foreign 
interests  conflicting  with  one  another  and  with  those  of 
the  nominally  sovereign  State.  When  a  national  govern- 
ment is  wholly  untrammelled  with  regard  to  the  manage- 
ment of  its  own  domestic  affairs  and  has  within  its  own 
hands  the  enforcement  of  law  within  its  own  territorial 
borders,  its  international  rights  and  responsibilities  are 
easily  determined  by  a  resort  to  well-established  princi- 
ples of  public  law.  But  when,  as  in  the  case  of  China, 
we  have  a  Power  which  permits  the  exercise  within  its 
limits  of  all  kinds  of  extraterritorial  rights  or  privileges ; 
when  there  exist  within  its  territory  spheres  of  interest, 
**  special  interests,'*  war  zones,  leased  territories,  treaty 
ports,  concessions,  settlements,  and  legation  quarters; 
when  there  are  in  force  a  multitude  of  special  engage- 
ments to  foreign  Powers  with  reference  to  commercial 
and  industrial  rights,  railways  and  mines,  loans  and 
currency;  when  two  of  its  chief  revenue  services — the 
maritime  customs  and  the  salt  tax — are  under  foreign 
overhead  administrative  control  or  direction;  when  the 


2       FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

proceeds  of  these  and  other  revenues  are  definitely- 
pledged  to  meet  fixed  charges  on  foreign  indebtedness; 
when,  at  various  points  within  its  borders,  there  are 
stationed  considerable  bodies  of  foreign  troops  under 
foreign  command  —  when  we  have  these  and  other 
phenomena  all  carrying  with  them  limitations  upon  the 
free  exercise  by  the  central  government  of  its  ordinary 
administrative  powers-  or  its  discretionary  right  to  deal 
as  it  deems  best  with  the  individual  nations  with  which 
it  maintains  treaty  relations,  we  then  have  a  condition  of 
affairs  which  furnishes  abundant  material  not  only  for 
theoretical  or  academic  discussions  by  students  of  inter- 
national jurisprudence,  but  for  serious  conflict  and  dis- 
putes between  the  nations  concerned.  It  is  clear,  then, 
that  before  one  can  hope  to  have  an  understanding  of 
the  political  situation  in  the  Far  East,  and  be  qualified 
to  form  an  intelligent  judgment  regarding  the  policies 
which  the  several  nations  should  adopt  with  reference  to 
China,  a  knowledge  must  be  obtained  of  at  least  the 
general  facts  regarding  the  rights  which  foreigners  have 
in  China  and  the  '  *  special  interests  "  or  * '  spheres  of 
interest  "  or  other  preferential  claims  which  certain  of 
the  Treaty  Powers  have  asserted  in  that  country.  This 
information  the  writer  seeks  to  supply  in  this  volume. 

The  writer  has  not  deceived  himself  nor  does  he  wish 
to  mislead  his  readers  with  the  idea  that  he  has  made  a 
complete  statement  of  the  situation.  But  he  hopes  that 
his  account  will  be  found  helpful,  if  not  fully  adequate, 
and  at  least  of  value  as  an  introduction  to  those  who 
desire  to  penetrate  farther  into  the  complexities  of 
China's  diplomacy  and  of  her  present  international 
status. 


INTEODUCTION  3 

Difficulty  in  Determining  China's  International  Commit- 
ments. In  connection  with  this  disclaimer  of  comprehen- 
siveness the  fact  should  be  mentioned  that,  under  any 
circumstances,  it  is  practically  impossible  to  make  a 
complete  statement  of  the  engagements  which  have  been 
entered  into  by  China  with  foreign  Powers  or  with  their 
nationals.  In  the  first  place,  there  is  the  difficulty  that 
presents  itself  when  dealing  with  the  diplomacy  and 
international  relations  of  any  country,  that  none  of  the 
Foreign  Offices  of  the  world  have  been  willing  to  publish 
in  full  the  correspondence  between  themselves  and  their 
diplomatic  representatives  stationed  abroad,  and  that 
even  the  portions  of  such  correspondence  as  finally  are 
made  public  often  appear  only  years  after  the  dates  they 
bear.  And,  even  as  to  the  treaties  themselves,  as  is  well 
known,  many  agreements  exist  that  are  known  only  to 
the  parties  signatory  to  them  or  to  their  allies.  Perhaps 
the  time  will  come  when  all  covenants  will  be  open  and 
openly  arrived  at,  but  as  yet  that  era  has  not  arrived. 

But  in  the  case  of  China's  international  relations  the 
peculiar  difficulty  confronts  the  student  that  there  are 
many  instances  in  which  China  has  committed  herself, 
in  writings  or  even  conversations  of  a  most  informal 
character,  which  have  not  been  recorded  or  made  public, 
and  which  are  only  presented  when  the  party  claiming 
under  them  a  beneficial  interest  deems  the  time  opportune 
for  doing  so.  Still  further,  that  in  many,  if  not  most  of 
these  cases,  the  State  of  China  has  been  held  bound  by 
promises  which  have  been  made,  or  are  alleged  to  have 
been  made,  by  individual  Chinese  officials  upon  their  own 
personal  responsibility. 

As  an  illustration  of  this  we  may  take  the  following 


4       FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

extract  from  a  newspaper  statement  by  Mr.  W.  F.  Carey, 
head  of  the  American  Siems-Garey  Company,  in  which  he 
describes  some  of  the  difficulties  with  which  he  had  to 
contend  in  the  attempt  to  locate  the  railways  for  the  con- 
struction of  which  his  company  had  obtained  concessions 
from  the  government  of  China.  After  speaking  of 
having  overcome  obstacles  imposed  by  the  **  spheres  of 
interest  "  of  the  different  nations,  he  found  that  he  had 
still  another  bridge  to  cross.    He  says: 

Shortly  after  we  secured  the  concession  for  this  line  and  com- 
menced our  active  surveys  thereon,  the  British  protested  to  the 
Chinese  Government  on  the  ground  that  in  1910  a  certain  Gov. 
John,  of  the  provinces  of  Honan  and  Hupeh,  had  written  to  a 
British  Consul  stating  that,  in  appreciation  of  assistance  rendered 
by  the  latter  in  securing  a  loan,  the  Governor  thereby  granted  to 
certain  British  interests  the  privilege  of  furnishing  any  funds  that 
might  be  required  in  the  future  for  railway  construction  throughout 
the  aforesaid  provinces.  While  I  have  no  personal  knowledge  of 
the  details  culminating  in  this  transaction,  I  am  satisfied  that  the 
alleged  concession  constituted  the  basis  of  the  assistance  rendered 
to  the  British  interest  in  the  premises."  "In  order  to  become 
vahd,''  Mr.  Carey  continues,  "  according  to  Chinese  law,  this  docu- 
ment should  have  had  the  sanction  of  the  throne,  for  at  that  time 
China  was  an  empire.  After  receiving  this  sanction,  the  document 
would  go  into  the  files  of  the  Minister  of  Communications,  who  has 
charge  of  all  China's  government  railways.  To  my  knowledge,  it 
was  never  clearly  shown  that  this  agreement  received  the  sanction 
of  the  throne,  and  as  far  as  I  know  it  was  not  resting  in  the  files 
of  the  Minister  of  Communications.  The  Chinese,  as  a  matter  of 
fact,  were  as  much  astounded  as  we  were  when  the  British  produced 
the  document.^ 

*It  is  perhaps  worth  mentioning  at  this  point  that  the  Viceroys  or 
Provincial  Governors  in  China  paid  no  great  heed  to  the  orders  of  the 
Central  Government.  Previously  to  this  time,  the  Peking  Government  had 
issued  a  mandate  declaring  that  it  would  not  be  responsible  for  contracts 


INTEODUCTION  6 

Another  illustration  of  the  same  kind  is  noted  by  Mr. 
Putnam  Weale  in  his  recent  volume,  The  Fight  for  the 
Republic  in  China.  He  cites  the  protest  made  in  1917  by 
France  against  the  buildiag  of  a  railway  in  Kwangsi  by 
Americans  and  financed  by  American  money,  the  protest 
being  based  upon  a  letter  sent  by  the  CMnese  Minister 
of  Foreign  Affairs  to  the  French  Legation  in  1914  with 
reference  to  a  frontier  dispute.  The  letter  contained  the 
following  paragraph:  **  In  order  to  demonstrate  the 
especially  good  friendly  relations  existing  between  the 
two  countries  the  Eepublican  Government  assures  Your 
Excellency  that  in  case  of  a  railway  construction  or  a 
mining  enterprise  being  undertaken  in  Kwangsi  Province 
in  the  future,  for  which  foreign  capital  is  required, 
France  would  first  be  consulted  for  a  loan  of  the  neces- 
sary capital.  On  such  an  occasion,  the  Governor  of 
Kwangsi  will  directly  negotiate  with  a  French  syndicate 
and  report  to  the  Government."  ^ 

Many  Agreements  not  Ratified  by  the  Chinese  Parlia- 
ment. Since  1911  China  has  been  governed,  in  theory  at 
least,  under  a  written  constitution  which  provides  for  a 
National  Parliament  and  that  that  body  shall  have  the 
right  *'  to  decide  the  amount  of  public  loans  and  agree- 
ments involving  any  obligation  on  the  state  treasury." 
Furthermore,  the  President  is  given  the  authority  to  con- 
clude treaties  only  with  the  approval  of  the  Parliament. 
As  a  matter  of  fact,  however,  little  regard  has  been  paid 

or  other  engagements  entered  into  without  its  consent  by  the  local  authori- 
ties, but  this  had  not  prevented  such  agreements  being  entered  into  with 
foreign  concerns.     The  Gov.  John  referred  to  by  Mr,  Carey  was  probably 
Viceroy  Chang  Chih-tung. 
*  Op.  cit.,  p.  306,  note. 


6       FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  these  provisions,  and  a  large  number  of  foreign  loans 
have  been  contracted,  for  which  the  Chinese  State  is 
held  responsible,  but  which  have  not  been  submitted  for 
approval  to  the  Parliament.  In  some  cases,  not  even  the 
President  or  the  whole  cabinet  has  been  consulted,  nor 
have  the  texts  of  the  loan  agreements  been  made  public. 
These  loans,  in  almost  aU  cases  have  been  made  by 
Japanese  banks  or  other  Japanese  financial  interests, 
and,  for  the  most  part  have  been  negotiated,  not  through 
the  Japanese  Legation  at  Peking  or  the  Chinese  Legation 
at  Tokyo,  but  by  a  pseudo  unofl&cial  Japanese  agent.  The 
important  military  and  naval  agreements  of  March,  1918, 
which  were  entered  into  between  China  and  Japan,  were 
negotiated  not  by  the  two  Foreign  Offices,  but  by  military 
representatives  of  the  two  countries,  and  their  texts  were 
not  made  public  until  this  was  practically  forced  at  the 
Paris  Peace  Conference. 

Both  in  ethics  and  in  international  law  it  might  be 
possible  to  raise  a  question  as  to  the  obligation  imposed 
upon  the  State  of  China  by  promises  made  by  minor 
officials,  or  even  by  cabinet  ministers,  who  have  had  no 
constitutional  power  to  make  such  promises  on  the  part 
of  their  government,  and  who,  in  many  cases,  indeed, 
have  acted  without  any  authorization  from  the  President 
or  the  Cabinet.  Even  where  moneys  have  been  paid  over 
and  expended  by  these  officials  the  point  might  conceiv- 
ably be  made  that  the  parties  advancing  the  moneys  have 
had  knowledge  of  the  fact  that  the  agreements  under 
which  they  were  advanced  were  without  validity  as  tested 
by  Chinese  law  and  that  therefore  they  acted  at  their  own 
risk  as  to  whether  the  Chinese  Government  would  assume 
the   obligation   of  making   repayment.    Especially,    in 


IITOEODUCTION  7 

equity,  might  such  a  point  be  made  against  the  many- 
loans  which  the  Japanese  have  made  to  various  of  the 
Chinese  authorities  in  view  of  the  fact  that  it  was  well 
known  to  them  that  the  sums  thus  advanced  would  be 
used  by  the  northern  military  party  in  China  to  continue 
the  civil  war  against  the  forces  of  the  southern  and  south- 
western provinces  which  at  that  time  did  not  recognize 
the  de  jure  character  of  the  government  at  Peking,  and 
that  thus  the  welfare  of  China  would  be  hindered  rather 
than  benefited  by  the  loans  thus  made.  However  this 
may  be,  the  fact  is  that  at  the  present  time  it  is  impossible 
to  determine  all  of  China's  obligations  to  foreign  powers 
or  to  their  nationals  by  an  examination  of  the  treaties  or 
other  agreements  which  have  been  formally  approved  by 
the  Government  at  Peking.  Even  that  government  itself 
does  not  know  all  of  its  commitments. 

In  connection  with  this  matter  of  China's  international 
commitments  it  is  of  interest  to  remember  that  the  entire 
action  of  the  Chinese  Peace  Delegation  at  Paris,  in  1919, 
and  the  contemporaneous  popular  opinion  in  China,  was 
based  upon  the  contention  that  the  Chinese  Nation  should 
not  be  held  bound  by  the  treaties  and  other  agreements 
with  Japan  made  during  the  period  of  1915  to  1918,  all  of 
which  lacked  parliamentary  approval,  and  some  of  which 
were  the  result  of  an  ultimatum  threatening  immediate 
military  pressure  in  case  they  were  not  signed.  So  far  as 
public  opinion  in  China  can  be  definitely  determined  it 
would  appear  that  the  Chinese  are  and  have  been  in  favor 
of  repaying  all  moneys  actually  received  through  loans 
irrespective  of  the  manner  in  which  those  loans  were  con- 
tracted or  the  manner  in  Which  their  proceeds  were  spent. 
Chinese  public  opinion  has  not  favored,  however,  the 


8       FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

continued  recognition  of  the  special  rights  and  incidental 
obligations  created  by  those  loans  or  other  agreements. 

Most  Favored  Nation  Clause  in  Its  Application  to  China. 

As  preliminary  to  an  understanding  of  the  treaty  rela- 
tions between  China  and  the  other  powers,  it  is  neces- 
sary to  say  a  word  regarding  the  operation  of  the  Most 
Favored  Nation  principle,  for  it  is  this  principle  that  has 
operated,  automatically,  to  extend  to  all  the  Treaty 
Powers  those  special  rights  which,  from  time  to  time, 
China  has  been  led  or  compelled  to  grant  to  particular 
Powers.  As  a  matter  of  fact,  however,  with  reference  to 
many  of  the  more  important  rights  which  foreign  nations 
and  their  nationals  have  in  China,  China  has  entered 
into  separate  and  several  treaties  with  the  different 
Treaty  Powers  concerned.  One  important  fact  which  has 
resulted  from  this  is  that  China  now  finds  herself  so 
circumstanced  that  she  is  unable  to  escape  from  these 
limitations  upon  her  freedom  of  action  except  with  the 
unanimous  consent  of  all  the  Powers  to  which  she  has 
severally  bound  herself — a  consent  which  experience  has 
shown  it  is  almost  impossible  for  her  to  obtain. 

The  sphere  within  which,  according  to  established 
principles  of  international  law,  the  doctrine  of  the  Most 
Favored  Nation  is  applicable,  does  not  appear  to  be 
exactly  determined,  but,  in  general,  it  may  be  said  to 
include  matters  of  navigation  and  commerce,  that  is, 
**  the  regulations  governing  importation,  exportation, 
transit,  trans-shipment,  warehousing,  customs,  tariff; 
the  rights  of  navigation  (light  anchorage,  pilotage,  buoys, 
etc.)  quarantine;  transit  charges  on  streams  and  canals; 
lying-in  of  vessels  in  ports  and  basins ;  storage  of  mer- 
chandise in  bonded  warehouses ;  fisheries ;  rights  of  pos- 


INTEODUCTION  9 

session  and  transmission  of  movable  or  immovable  goods ; 
payment  of,  or  exemption  from  imposts;  extraordinary 
contributions  and  forced  levies;  service  in  the  army  or 
militia;  conditions  of  nationality,  the  establishment  of 
consulates,  etc.,  etc.*'^ 

Mr.  Herod  says  of  the  Favored  Nation  Clause : 

While  its  use  is  not  confined  to  treaties  of  navigation  and  com- 
merce, but  extends  to  consular,  trade-mark,  and  other  conventions, 
it  is  as  broad  as  the  basis  of  the  treaty  in  which  it  is  employed,  and 
is  intended  to  include  all  subjects  which  fall  properly  under  the 
general  heading  or  title  of  the  formal  agreement.  But  it  does 
not  need  to  be  said  thalt,  by  its  very  nature,  it  can  have  no  apphca- 
tion  to  agreements  of  a  political  nature. 

Professor  S.  K.  Hombeck,  who  has  given  us  the  most 
recent,  as  well  as  the  most  satisfactory  discussion  of  the 
Most  Favored  Nation  Clause,*  states  its  limitations  as 
follows : 

It  is  not  intended  that  the  clause  shall  operate  so  as  to  affect  the 
internal  pohcy  of  the  State ;  it  applies  solely  to  treatment  of  foreign 
States,  that  is,  to  the  relative  treatment  of  the  citizens  and  the 
commerce  of  foreign  States.  It  is  not  usually  considered  as  com- 
prehending special  arrangements  and  reciprocity  between  nations, 
where  on  account  of  proximity  or  special  circumstances,  reason 
exists  for  relations  which  cannot  be  sihared  by  the  world  at  large. 
Special  relations  between  a  colony  and  the  mother  country  are 
generally  understood  to  be  exempt  from  the  operation  of  the  clause. 

Two  quite  different  constructions  have  been  given  by 
the  different  nations  to  the  operation  of  the  clause. 
According  to  what  has  come  to  be  known  as  the  American 

"  Herod,  Favored  Nation  Treatment,  p.  2. 

*  In  three  articles  in  the  American  Journal  of  International  Law,  Vol. 
ra,  pp.  395,  691,  and  797. 


10      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

view,  other  nations  are  not  held  entitled  to  the  privileges 
granted  by  the  contracting  States  unless  those  nations 
furnish  the  same  considerations  or  make  the  same  recip- 
rocal concessions  which  the  contracting  States  had 
furnished  or  made  to  each  other. 

This  doctrine  is  set  out  and  argued  by  the  United 
States  in  correspondence  extending  over  fourteen  years 
relating  to  a  claim  made  by  France  under  the  favored 
nation  clause  contained  in  a  treaty  entered  into  in  1803 
between  Prance  and  the  United  States  for  the  cession  to 
the  latter  of  the  Louisiana  Territory. 

Opposed  to  this  doctrine  is  the  one  especially  favored 
by  nations  pursuing  a  policy  of  free  trade  which  asserts 
that  any  commercial  or  non-political  privilege  granted 
by  one  State  to  another  State  may  be  claimed  by  other 
States  who  have  been  promised  most  favored  nation 
treatment  by  the  State  granting  the  privilege,  and  this 
without  regard  to  whether  the  State  thus  claiming  the 
privilege  makes  or  is  in  a  position  to  return  therefor  a 
quid  pro  quo  corresponding  to  that  upon  which  the  grant- 
ing of  the  privilege  in  question  was  made.^ 

Dispute  as  to  which  of  the  two  foregoing  doctrines  of 
most  favored  nation  treatment  shall  be  applied  can  be, 
and  now  often  is,  prevented  by  specifying,  where  the  most 
favored  treatment  is  promised,  whether  it  is  to  be  con- 
strued to  be  conditional  or  gratuitous. 

The  most  favored  nation  clause  made  its  appearance 
in  China  at  practically  the  beginning  of  its  treaty  rela- 

•  For  an  account  of  most  favored  nation  clauses  in  American  treaties,  see 
Moore's  Digest  of  International  Law,  Vol.  v,  Sec.  765.  See  also  the  article 
by  A.  H.  Washburn,  "The  American  Interpretation  of  the  Most  Favored 
Nation  Doctrine,"  in  the  Virginia  Law  Review,  January,  1914  (Vol.  i, 
p.  257). 


INTRODUCTION  11 

tions  with  the  Western  Powers.  In  the  so-called  Supple- 
mentary, or  Hoomun-Chai,  Treaty  of  1843  with  Great 
Britain,  it  was  provided  (Article  vm) : 

The  Emperor  of  China  having  been  graciously  pleased  to  grant 
to  all  foreign  countries  whose  subjects,  or  citizens,  have  hitherto 
traded  at  Canton  the  privilege  of  resorting  for  purposes  of  trade  to 
the  other  four  ports  of  Foochow,  Amoy,  Ningpo,  and  Shanghai, 
on  the  same  terms  as  the  English,  it  is  further  agreed,  that 
should  the  Emperor  hereafter,  from  any  cause  whatever,  be  pleased 
to  grant  additional  privileges  or  immunities  to  any  of  the  subjects 
or  citizens  of  such  foreign  countries,  the  same  privileges  and 
immunities  will  be  extended  to  and  enjoyed  by  British  subjects; 
but  it  is  to  be  understood  that  demands  or  requests  are  not,  on  this 
plea,  to  be  unnecessarily  brought  forward." 

Clauses  similar,  and  even  broader  than  this,"^  were  soon 
after  included  in  treaties  between  China  and  the  other 
Powers.  The  result,  of  course,  is  that  in  order  to  deter- 
mine what  treaty  rights  a  particular  nation  has  in  China 
it  is  necessary  to  ascertain  what  privileges  or  immunities 
of  a  commercial  or  economic  nature  have  been  granted 
by  China  to  any  of  the  other  Treaty  Powers.^ 

Chinese  Circular  of  1878.  In  the  Circular  of  1878  sent 
by  the  Chinese  Foreign  Office  to  its  ministers  abroad,  the 
following  complaint  was  made: 

•  Customs  Treaties,  i,  p.  393. 

'  For  example,  in  the  Treaties  of  Tientsin  of  1858,  it  was  provided  that 
the  nations  concerned  should  enjoy  the  privileges  or  immixnities  which 
"  may  have  been  or  may  be  hereafter  granted." 

•With  reference  to  the  operation  of  the  most  favored  nation  clause  in 
China,  see  especially  Chapter  iv  of  Tyau's  The  Legal  Obligations  Arising 
Out  of  Treaty  Relations  between  China  and  Other  States;  and  an  article 
by  Kuo  Ytin-Kuan  entitled  "  The  Legitimate  Bounds  of  Most  Favored 
Nation  Treatment  in  China,"  in  the  Chinese  Social  and  Political  Science 
Review,  Vol.  i,  p.  40  (April,  1916). 


12      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  Most  Favored  Nation  Clause  is  found  in  aU  the  treaties  and 
it  is  well  that  it  should  be  so ;  for  it  is  difficult  for  China  to  distin- 
guish between  foreigners,  or  say  which  belong  to  which  nationality; 
and  so  much  is  this  so,  that  even  non-treaty  power  foreigners  are 
trusted  like  the  others.  The  object  of  the  foreign  negotiator  in 
introducing  this  clause  was  to  prevent  his  own  nationals  from  being 
placed  at  a  disadvantage  as  compared  with  others,  and  to  secure 
that  all  should  be  equally  favored.  Now,  this  is  precisely  what 
China^  desires.  But  foreign  governments,  although  their  objects  in 
negotiating  for  the  most-favored-nation  clause  were  similar  to  those 
of  China,  are  not  always  fair  in  their  interpretation  of  it.  For 
example,  if  China,  for  a  consideration,  grants  a  certain  country  a 
new  privilege  on  such  and  such  conditions,  this  would  be  of  the 
nature  of  a  special  concession  for  a  special  consideration.  Should 
other  countries  come  forward  and,  in  virtue  of  the  most  favored 
nation  clause,  claim  to  participate  in  the  new  privilege,  although 
China  need  not  necessarily  exact  a  similar  consideration  in  return, 
yet  it  would  be  only  just  to  expect  that  in  enjoying  the  privilege 
they  would  consent  to  observe  the  conditions  accepted  by  the  power 
to  which  it  was  originally  granted.  But,  far  from  this  being  the 
case,  there  are  some  who,  while  demanding  the  privilege,  refuse  to 
be  bound  by  the  conditions  attaching  to  it.  This  is  the  unfair 
interpretation  to  which  China  objects.  In  a  word,  as  regards  this 
most  favored  nation  clause,  we  hold  that  if  one  country  desires  to 
participate  in  the  privileges  conceded  to  another  country,  it  must 
consent  to  be  bound  by  the  conditions  attached  to  them,  and 
accepted  by  another.® 


•  U.  B.  For.  Rels.,  1880,  p.  177. 


CHAPTEE  n 

EXTRATERRITOBIALITY    IN    ChINA 


An  understanding  of  the  extraterritorial  rights  enjoyed 
by  foreigners  resident,  trading,  or  traveling  in  China  is 
a  prerequisite  to  an  understanding  of  domestic  conditions 
in  that  country  as  well  as  of  its  international  relations. 
It  is  a  subject,  therefore,  which  we  shall  consider  with 
some  degree  of  particularity.  In  pursuing  this  inquiry 
we  are  fortunate  in  having  the  aid  of  such  works  as 
those  of  Koo,  Tyau,  Morse,  Piggott,  and  Hinckley.^ 

Trade  Conditions  Prior  to  1842.  Commercial  and  other 
relations  between  China  and  the  nationals  of  Western 
Powers  date  from  comparatively  early  times,  but  it  was 
not  until  the  Treaty  of  Nanking  in  1842  that  a  beginning 
was  made  of  formal  treaty  relations.^    There  had  been, 

*  V.  K.  Wellington  Koo,  The  Stattis  of  Aliens  in  China,  Coliimbia  Univer- 
sity Press,  1912.  M,  T.  Z.  Tyau,  The  Legal  Obligations  Arising  Out  of 
Treaty  Relations  Between  China  and  Other  States,  Shanghai,  Commercial 
Press,  1917.  H.  B.  Morse,  The  Trade  and  Administration  of  China, 
Shanghai,  Kelly  &  Walsh,  1913.  F.  E.  Hinckley,  American  Consular  Juris- 
diction in  the  Orient,  Washington,  D.  C,  Lowdermilk,  1906.  Sir  Francis 
Piggott,  Extraterritoriality,  new  ed.,  1907. 

'This  statement  perhaps  needs  qualification  as  regards  certain  early 
trade  agreements  in  the  seventeenth  and  eighteenth  centuries  between 
Eussia  and  China.  These,  however,  made  no  provision  for  placing  inter- 
national relations  with  China  upon  a  formal  or  systematic  basis.  It  was 
not  until  the  Treaties  of  Tientsin  in  1858  that  provision  was  made  for  the 
stationing  of  regular  diplomatic  representatives  at  Peking.  The  Chinese 
did  not  create  a  Ministry  of  Foreign  Affairs — ^the  Tsungli  Yamen — until 
1860.  Before  this  time  the  Chinese  Government  had  dealt  with  the  repre- 
sentatives of  foreign  Powers  as  agents  of  States  inferior  to,  or  dependent 
upon,  itself. 

13 


14      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

however,  prior  to  this  date  a  considerable  amount  of 
maritime  trading  on  the  part  of  foreigners  with  the 
Chinese,  especially  by  the  British  at  and  in  the  vicinity 
of  Canton.  This  trade,  however,  had  received  no  formal 
recognition,  nor  had  the  traders  been  given  any  legal 
standing  in  China  by  the  Imperial  Government  at  Peking. 
Attempts  upon  the  part  of  the  English  Government  to 
correct  this  unsatisfactory  condition  of  affairs  had  met 
with  contemptuous  refusal  upon  the  part  of  the  imperial 
authorities. 

During  this  non-treaty  period  there  was  frequent 
friction  between  the  foreigners  and  the  local  Chinese 
authorities  due,  upon  the  one  hand,  to  the  refusal  of  the 
Chinese  to  recognize  those  rights  of  the  foreigners  which 
Western  international  law  recognized  (for  example,  with 
regard  to  the  status  of  ships-of-war  in  foreign  ports) ; 
and,  upon  the  other  hand,  to  the  refusal  of  the  foreigners 
to  recognize  the  due  authority  of  the  local  law  and  courts. 
With  regard  to  this  second  point  we  may  quote  Dr.  Koo  's 
analysis  of  the  situation.    He  says : 

A  want  of  regard  for  Chinese  laws  characterized  the  foreigners 
who  went  to  China  in  the  seventeenth  and  eighteenth  centnries. 
They  were  either  adventurers  or  desperate  characters,  and,  with 
the  exception  of  a  few  missionaries,  they  were  all  animated  by  the 
sole  desire  to  seek  fortunes  in  a  new  land.  It  mattered  httle  what 
the  territorial  laws  required  and  what  they  prohibited;  they  came 
on  a  mission  to  replenish  their  purses  and  were  prepared  to  leave 
as  soon  as  their  object  was  accomplished ;  in  their  opinion,  it  would 
have  been  disloyal  to  themselves  to  allow  their  conduct  to  be 
shackled  by  laws  of  which  they  knew  nothing,  and  about  which  they 
did  not  care  to  know  anything.  A  small  number  of  them,  endowed 
with  an  inquiring  mind,  indeed  manifested  an  interest  in  Chinese 
laws  and  acquired  a  knowledge  of  them;  but  then,  they  observed, 
China  was  such  a  different  country  from  their  own,  particularly  in 


EXTEATEEEITOEIALITY  15 

religion,  that  they  considered  it  impossible  to  obey  her  laws  without 
at  the  same  time  humiliating  themselves  and  disgracing  their  own 
country.  To  govern  themselves  by  laws  with  which  they  were 
familiar  was  equally  impossible ;  there  was  no  common  organization 
in  existence  over  them,  nor  could  they  recognize  any  one  of  their 
own  class  assuming  to  restrain  their  conduct  in  China  and  regulate 
their  intercourse  with  the  Chinese  people.  Under  these  circum- 
stances it  is  not  surprising  that  they  considered  themselves  as 
exempt  from  all  laws.^ 

As  a  presentation  of  the  situation  from  another  point 
of  view,  we  may  quote  from  the  elaborate  communication 
sent  September  29,  1844,  by  Caleb  Gushing  to  John  C. 
Calhoun,  Secretary  of  State,  in  support  of  the  doctrine 
that  American  citizens  in  China  should  not  be  subjected 
to  the  laws  and  courts  of  the  territorial  sovereign.^ 

Nothing,  it  would  seem,  correspondent  to  our  law  of  nations, 
is  recognized  or  understood  in  China.  I  had  some  evidence  of 
this  in  the  progress  of  my  own  intercourse  with  the  Chinese  author- 
ities; and  there  is  abundance  of  public  facts  to  the  same  effect. 
When,  for  example,  Commodore  Anson  visited  China,  in  1841, 
the  Chinese  claimed  to  apply  the  municipal  law  to  the  Centurion, 
as  they  have  repeatedly,  since  then,  sought  to  do  in  case  of  other 
ships-of-war,  those  of  the  United  States  as  well  as  of  Europe.  In 
the  progress  of  the  late  events,  we  have  seen  the  Chinese  Govern- 
ment subject  a  diplomatic  agent  of  Great  Britain  to  personal 
restraint,  and  undertake  to  restrain  the  consuls  of  all  foreign 
Powers  in  order  to  enforce  the  submission  of  the  subjects  of  one 
Power,  Subsequently,  during  the  prosecution  of  hostiHties,  the 
Chinese  paid  no  regard  to  flags  of  truce,  and  treated  prisoners  of 
war  of  both  sexes  as  common  felons.  These  things  evince  utter 
ignorance,  or  at  least  disregard  of  the  law  of  nations,  as  understood 
in  Europe.     Similar  inferences  are  deducible  from  the  fact  that 

'  Op.  cit.,  p.  64. 

*  Sen.  Ex.  Doc.  58,  28th  Cong.,  2nd  sess.  In  1844,  while  in  China,  Mr. 
Gushing  negotiated  the  first  Sino-American  treaty. 


16      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHfNA 

formerly  all  ministers  of  European  States  in  China  (except  perhaps 
those  of  Eussia)  -wiere  compelled  to  admit,  either  directly  or  indi- 
rectly, the  sovereignty  of  China;  for  the  several  Dutch  and  Portu- 
guese ministers  who  visited  Peking  did  homage  to  the  Ta  Howang 
Tei,  and  even  Lord  Macartney  and  Lord  Amherst,  though  the 
former  peremptorily  refused  to  do  homage  and  the  latter  was 
reluctantly  persuaded  by  Sir  George  Staunton  to  refuse  it,  yet  went 
to  Peking,  both  of  them,  knowingly  and  with  tacit  acquiescence 
designated  as  tribute  bearers. 

*'  With  such  extravagant  political  pretences,"  Mr. 
Gushing  continues, ' '  it  is  to  be  supposed,  of  course,  that 
the  Chinese  Government  would  assert  a  complete  and 
exclusive  municipal  jurisdiction  over  all  the  persons 
within  the  territory  and  waters  of  the  empire. '  * 

Yet  Mr.  Gushing  admitted,  as  perforce  he  was  obliged 
to  do,  that  the  Chinese  were  at  that  time  a  highly  civilized 
people.  He  said:  ''It  is  impossible  to  deny  to  China  a 
high  degree  of  civilization,  though  that  civilization  is,  in 
many  respects,  different  from  ours ;  yet  the  magnitude  of 
the  Empire,  the  stability  of  its  political  institutions,  the 
great  advancement  which  the  Chinese  have  made  in  the 
arts  of  life,  the  sedulous  cultivation  of  letters,  as  well  as 
the  other  useful  and  ornamental  objects  of  intellectual 
pursuit,  are  such  as  to  give  to  China  as  complete  a  title 
to  the  appellation  of  civilized  as  many  if  not  most  of  the 
States  of  Christendom  can  claim." 

Basis  of  Extraterritoriality  in  China.  Despite  the  admis- 
sion which  has  been  quoted,  Mr.  Gushing  went  on  to 
contend  that  the  American  Government  should  demand 
extraterritorial  rights  in  China  for  American  citizens, 
not  as  a  matter  of  concession  upon  the  part  of  China,  but 
as  a  principle  of  established  international  law ;  —  that  is, 


EXTEATEEEITOEIALITY  17 

that  such  a  nation  as  China  then  was,  was  not  entitled 
to  assert  the  general  principle  of  territorial  sovereignty 
in  order  to  retain  jurisdiction  over  persons  within  her 
borders.  In  substantiation  of  this  doctrine  Mr.  Gushing 
relied  upon  what  had  been  the  practice  among  European 
nations  prior  to  the  development  of  the  comparatively 
modern  idea  of  exclusive  territorial  sovereignty,  and 
what  had  continued  to  be  the  practice  with  reference  to 
status  of  nationals  of  the  Western  Powers  residing  in 
the  Levant. 

It  is  quite  clear,  however,  that  Mr.  Gushing  was  in 
error  in  founding  the  claim  to  extraterritorial  rights  in 
Ghina  upon  the  same  basis  as  that  supporting  them  in 
the  Mohammedan  countries  of  the  Near  East,  or  in 
finding  for  them  a  homologue  in  the  conceptions  of 
personal  sovereignty  which  prevailed  in  Europe  prior  to 
the  fifteenth  and  sixteenth  centuries. 

As  regards  this  latter  point,  Mr.  Gushing  himself 
states  that  Ghina  insisted  upon  the  doctrine  of  territorial 
jurisdiction,  though  she  not  always  was  successful  in 
securing  its  application.^  As  contrasted  with  this,  the 
Mohammedan  States  were,  as  a  rule,  more  than  willing 
that  the  foreigners  —  and  unbelievers  —  should  remain 
under  their  own  national  laws,  and,  out  of  this  willing- 
ness, developed  a  custom,  extending  over  many  years, 
and  recognized  by  many  **  capitulations  "  which  sup- 

■  Morse  calls  attention  to  the  fact  that  the  early  treaties  between  China 
and  Russia  in  the  seventeenth  and  eighteenth  centuries,  contained  mutual 
provisions  for  the  handing  over  to  their  own  oflScials  for  punishment 
nationals  committing  offenses  in  the  other's  covmtry.  But  no  arrangement 
was  made  for  the  appointment  by  Russia  of  consuls  or  other  officials  who 
might  exercise  jurisdiction  in  China.  Trade  and  Administration  in  China, 
Chap.  vn. 

2 


18      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ported  the  system  of  extraterritoriality  which  existed  in 
Turkey  and  other  Mohammedan  countries. 

In  fine,  then,  upon  this  rather  important  point  we 
would  hold  that  Dr.  Koo  is  well  justified  in  the  extended 
criticism  which  he  makes  of  Mr.  Gushing 's  argument  and 
agree  with  him  that  the  whole  body  of  extraterritorial 
rights  which  have  existed  in  China  for  three-quarters  of 
a  century  owe  their  legal  existence  to  concessions  made 
by  China  in  her  treaties  with  Western  Powers ;  in  short, 
that  these  treaties  created  the  rights  and  did  not  simply 
recognize  rights  which  had  another  origin.® 

Origin  of  Extraterritoriality.  This  situation  in  which 
the  foreigners  claimed  exemption  from,  and  the  Chinese 

"  "  The  assertion  and  exercise  by  Great  Britain  of  jurisdiction  over  her 
subjects  in  China,"  says  Dr.  Koo  (p.  63),  "were  commenced  nearly  a 
decade  before  China's  consent  to  such  questionable  procedure  was 
obtained.  .  ,  .  What  Oreat  Britain  succeeded,  therefore,  in  wringing  from 
China  at  the  end  of  the  expensive  and  ignoble  war  in  1842,  in  respect  of 
the  question  of  jurisdiction  over  British  subjects  in  China,  was  merely  an 
official  recognition  of  what  had  already  been  brought  into  being  and 
engrafted  on  her,  in  practice,  without  her  consent  or  countenance." 

Mr.  Hinckley  in  his  American  Consular  Jurisdiction  in  the  Orient,  takes 
the  same  position  as  that  of  Dr.  Koo.    He  says  (p.  15) : 

"  Between  the  treaties  with  Turkey  and  those  with  China  there  is  this 
fundamental  difference,  that  the  treaties  with  China  contain  no  reference 
to  privileges  resting  upon  customs  and  usages.  With  the  exception  of  the 
restricted  privileges  enjoyed  by  the  Russian  caravans  in  extreme  north- 
western China  many  years  before  the  western  European  treaties  with  China 
were  made,  these  treaties  marked  the  very  beginning  of  extraterritorial 
jurisdiction  in  that  country.  The  earlier  practice  had,  in  fact,  been  just 
the  opposite  of  that  stipulated  in  the  treaties.  But  the  customary  rights 
of  foreigners  in  Turkey  were  so  considerable  and  of  so  long  standing  that 
no  attempt  was  made  to  reduce  all  of  them  to  explicit  written  statement." 

And  on  page  16,  Hinckley  adds :  "  Another  fundamental  distinction  is 
that  in  the  Mohammedan  states  foreigners  of  whatever  Christian  nation, 
whether  subjects  of  the  treaty  powers  or  not,  are  by  immemorial  custom 
permitted  to  enjoy  extraterritorial  privileges  through  the  system  of  con- 
sular protection." 


EXTKATERRITOEIALITY  19 

insisted  upon  subjection  to,  the  local  law  and  local 
authorities  inevitably  led  to  constant  disputes  and 
became  still  more  unendurable  when  the  matter  of  the 
control  of  the  importation  of  Indian  opium  into  China 
became  involved.  The  so-called  Opium  War  between 
China  and  Great  Britain,  which  was  the  result  of  this 
friction,  was  terminated  by  the  Treaty  of  Nanking  in  1842, 
which  marks  not  only  the  legalized  beginning  of  the 
system  of  extraterritorial  rights  in  China,  but  also  of 
formal  treaty  relations  between  China  and  the  Western 
Powers.  Elsewhere  we  shall  have  occasion  to  speak  of 
the  provisions  of  this  Treaty  of  Nanking  with  reference 
to  foreign  trade  with  China.  Here  we  shall  be  concerned 
only  with  its  bearing  upon  the  matter  of  extraterri- 
toriality. 

Extraterritorial  rights  were  not  expressly  granted  in 
the  treaty,  but  that  instrument  made  provision  for  the 
functioning  of  British  Consular  officials  in  China,  and  it 
is  clear  that  it  was  the  understanding  of  those  who  nego- 
tiated the  treaty  that  extraterritorial  rights  should  be 
enjoyed  by  British  traders  resident  in  China.  This 
understanding  was  given  expression  to  in  the  so-called 
**  General  Eesolutions  "  issued  in  pursuance  of  the 
Treaty.  Article  XIII  of  these  Resolutions  read  as 
follows : 

Whenever  a  British  subject  has  reason  to  complain  of  a  Chinese 
he  must  first  proceed  to  the  Consulate  and  state  his  grievance.  The 
consul  will  thereupon  inquire  into  the  merits  of  the  case,  and  do 
his  utmost  to  arrange  it  amicably.  In  like  manner,  if  a  Chinese 
have  reason  to  complain  of  a  British  subject,  he  shall  no  less 
listen  to  his  complaint,  and  endeavor  to  settle  it  in  a  friendly- 
manner.  ...  If,  unfortunately,  any  disputes  take  place  of  such 
a  nature  that  the  Consul  cannot  arrange  them  amicably,  then  he 


20      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

shall  request  the  assistance  of  a  Chinese  ofl&cer,  that  they  may 
together  examine  into  the  merits  of  the  case,  and  decide  it  equitably. 
Regarding  the  punishment  of  English  criminals,  the  English 
Government  will  enact  the  laws  necessary  to  attain  that  end,  and 
the  Consul  wiU  be  empowered  to  put  them  in  force ;  and  regarding 
the  punishment  of  Chinese  criminals,  these  will  be  tried  and 
punished  by  their  own  laws,  in  the  way  provided  for  by  the  corre- 
spondence which  took  place  at  Nanking,  after  the  concluding  of 
the  peace.' 

It  wiU  be  noted  that,  as  correlative  to  the  granting  of 
this  special  status  to  resident  merchants,  the  Chinese 
Government,  in  the  Supplementary  Treaty  of  1843,  took 
care  to  have  it  expressly  stated  that  the  merchants  should 
not  have  the  right  to  repair  to,  or  trade  at,  any  but  the 
five  specified  ports,  and  that  even  as  to  those  ports,  the 
foreign  merchants  were  not  to  go  into  the  surrounding 
country  beyond  certain  short  distances  to  be  named  by 
the  local  authorities  in  concert  with  the  British  Consul.^ 

American  Treaty  of  1844.  The  exercise  of  extraterri- 
torial rights  thus  placed  upon  a  definite  basis,  received 
still  more  explicit  statement  in  the  treaty  of  1844  between 
the  United  States  and  China.  Article  XXI  of  that  agree- 
ment provided  as  follows : 

Subjects  of  China  who  may  be  guilty  of  any  criminal  act  towards 
citizens  of  the  United  States  shall  be  arrested  and  punished  by  the 
Chinese  authorities  according  to  the  laws  of  China,  and  citizens  of 
the  United  States  who  may  commit  any  crime  in  China  shall  be 
subject  to  be  tried  and  punished  only  by  the  Consul  or  other  pubHc 
functionary  of  the  United  States  thereto  authorized  according  to 

*  Customs  Treaties,  I,  p,  388. 

•For  an  accomit  of  British  Statutes  and  Orders  in  Council,  making 
provision  for  the  exercise  in  China  of  British  Consular  and  other  jurisdic- 
tion, see  Koo,  op.  cit.,  pp.  138  ff. 


EXTEATEREITORIALITY  31 

th€  laws  of  the  United  States ;  and  in  order  to  secure  the  prevention 
of  all  controversy  and  disaffection,  justice  shall  be  equitably  and 
impartially  administered  on  both  sides.® 

This  article,  it  will  be  observed,  related  only  to  criminal 
cases.  In  Article  XXIV,  however,  there  was  the  provision 
that  **  if  controversies  arise  between  citizens  of  the 
United  States  and  subjects  of  China,  which  cannot  be 
settled  amicably  otherwise,  the  same  shall  be  examined 
and  decided  conformably  to  justice  and  equity  by  the 
public  officers  of  the  two  nations  acting  in  conjunction." 
And  in  Article  XXV  it  was  declared : 

AU  questions  in  regard  to  rights,  whether  of  property  or  person, 
arising  between  citizens  of  the  United  States  in  China,  shall  be 
subject  to  the  jurisdiction  of,  and  regulated  by  the  authorities  of 
their  own  Government.  And  all  controversies  occurring  in  China 
between  citizens  of  the  United  States  and  subjects  of  any  other 
Government  shall  be  regulated  by  the  treaties  existing  between  the 
United  States  and  such  Governments,  respectively,  without  inter- 
ference on  the  part  of  China.^° 

And  furthermore,  by  Article  XVE,  there  was  the  f oUow- 
ing  specific  provision  with  regard  to  the  procedure  for 
the  collection  of  debts: 

The  Chinese  Government  will  not  hold  itself  responsible  for  any 
debts  which  may  happen  to  be  due  from  subjects  of  China  to 
citizens  of  the  United  States,  or  for  frauds  committed  by  them; 
but  citizens  of  the  United  States  may  seek  redress  in  law;  and  on 
suitable  representation  being  made  to  the  Chinese  local  authorities 
through  the  Consul,  they  will  cause  due  examination  in  the 
premises,  and  take  all  proper  steps  to  compel  satisfaction.  But  in 
case  the  debtor  be  dead,  or  without  property,  or  have  absconded, 
the  creditor  cannot  be  indemnified  according  to  the  old  system  of 

•  Customs  Treaties,  i,  p.  685. 
"  Customs  Treaties,  i,  p.  687. 


22      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  co-hong,  so  called.  And  if  citizens  of  the  United  States  be 
indebted  to  subjects  of  China,  the  latter  may  seek  redress  in  the 
same  way  through  the  Consul,  but  without  any  responsibility  for 
the  debt  on  the  part  of  the  United  States.^^ 

Tientsin  Treaty  of  1858.  In  the  Chinese-American 
treaty  of  June  18, 1858,  the  so-called  Tientsin  Treaty,  we 
find  extraterritoriality  provided  for  in  the  following 
language : 

Article  XI.  .  .  .  Subjects  of  China  guilty  of  any  criminal  act 
towards  citizens  of  the  United  States  sihall  be  punished  by  the 
Chinese  authorities  according  to  the  laws  of  China ;  and  citizens  of 
the  United  States,  either  on  shore  or  in  any  merchant  vessel,  who 
may  insult,  trouble  or  wound  the  persons  or  injure  the  property 
of  Chinese,  or  commit  any  other  improper  act  in  China,  shall  be 
punished  only  by  the  Consul  or  other  public  functionary  thereto 
authorized,  according  to  the  laws  of  the  United  States.  Arrests  in 
order  to  trial  may  be  made  by  either  the  Chinese  or  the  United 
States  authorities.^^ 

Finally,  by  Article  IV  of  the  Supplemental  Treaty  of 
November  17,  1880,  between  China  and  the  United 
States,  the  extraterritorial  principle  was  still  more 
specifically  stated  in  the  following  words :  ^^ 

When  controversies  arise  in  the  Chinese  Empire  between  citizens 
of  the  United  States  and  subjects  of  His  Imperial  Majesty  which 
need  to  be  examined  and  decided  by  the  public  officers  of  the  two 
nations,  it  is  agreed  between  the  Governments  of  the  United  States 
and  China  that  such  cases  shall  be  tried  by  the  proper  official  of 
the  nationality  of  the  defendant.  The  properly  authorized  official 
of  the  plaintiffs  nationality  shall  be  freely  permitted  to  attend  the 
trial,  and  shall  be  treated  with  the  courtesy  due  to  his  position. 

"  Ibid.,  I,  p.  683. 
"  Customs  Treaties,  I,  p.  717. 

"  See  also  the  statement  of  the  principle  in  the  Chefoo  Convention  of 
1876  between  Great  Britain  and  China. 


EXTEATERRITOEIALITY  23 

He  shall  be  granted  all  proper  facilities  for  watching  the  proceed- 
ings in  the  interests  of  justice.  If  he  so  desires,  he  shall  have  the 
right  to  present,  to  examine,  and  to  cross-examine  witnesses.  If 
he  is  dissatisfied  with  the  proceedings,  he  shall  be  permitted  to 
protest  against  them  in  detail.  The  law  administered  will  be  the 
law  of  the  nationality  of  the  officer  trying  the  case.^* 

Extraterritorial  Jurisdiction  Summarized.  Applying  the 
principles  stated  in  the  extraterritorial  provisions  of  the 
treaties  which  have  been  quoted,  it  is  found  that  the 
situation  is  as  follows : 

1.  As  regards  the  controversies  in  which  no  foreigners 
are  involved,  the  jurisdiction  is  wholly  in  the  hands  of 
the  Chinese  authorities,  and  the  suits  are  adjudicated 
according  to  Chinese  law  and  procedure. 

2.  As  regards  controversies  between  two  or  more 
nationals  of  the  same  Treaty  Power,  the  jurisdiction  is 
exclusively  in  the  consular  or  other  courts  which  that 
Power  is  permitted  by  China  to  establish  and  operate  in 
China,  and  the  law  applied  is  that  of  the  Power  concerned. 
Chinese  police  officials  may  make  arrests,  in  criminal 
cases,  but  the  offenders  must  be  brought  as  speedily  as 
possible  and  without  undue  hardship  before,  and  surren- 
dered into  the  custody  of,  the  authorities  of  the  State 
of  which  the  offenders  are  nationals. ^^ 

3.  Over  controversies  between  nationals  of  different 
Treaty  Powers,  the  Chinese  authorities  exercise  no  juris- 

"  Customs  Treaties,  i,  p.  738. 

"Koo  {op.  cit.,  p.  179)  says  of  civil  controversies  between  aliens  in 
China :  "  The  general  practice  is  that  they  are  arranged  oflScially  by  the 
consuls  of  both  parties  without  resort  to  litigation;  but  where  amicable 
settlement  is  impossible,  the  principle  of  jurisdiction  followed  is  the  same 
as  in  those  between  China  and  a  foreign  Power,  namely,  the  plaintiff 
follows  the  defendant  into  the  court  of  the  latter's  nation." 


24      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

diction:  they  are  determined  by  the  authorities  and  the 
laws  of  the  States  concerned  according  to  agreements 
thereunto  appertaining  entered  into  between  these 
States. 

4.  As  regards  actions  brought  by  nationals  of  non- 
treaty  Powers  against  nationals  of  the  Treaty  Powers 
the  jurisdiction  is  in  the  authorities  of  the  Treaty  Powers. 
As  regards  suits,  civil  or  criminal,  in  which  the  non- 
Treaty  Power  nationals  are  defendants,  jurisdiction  is  in 
the  Chinese  courts.  As  regards  controversies  to  which 
all  the  parties  are  non-treaty  power  nationals,  or  in 
which  they  appear  as  plaintiffs  or  complainants  against 
Chinese  defendants,  the  jurisdiction  is  in  the  Chinese 
tribunals  and  the  law  applied  is  that  of  China.  The 
Treaty  Powers  sometimes  exercise  their  "  good  offices  " 
in  behalf  of  non-treaty  power  nationals  in  such  suits,  but 
there  does  not  exist  in  China  the  system,  found  in  Turkey 
and  other  countries  of  the  Levant,  according  to  which  a 
Treaty  Power  is  permitted  to  take  under  its  protection 
and  authority,  as  proteges,  the  nationals  of  other 
powers.^' 

"  It  should  be  noted  that  some  of  the  Powers  have  attempted  to  introduce 
into  China  the  principle  of  prot4g6a.  Especially  has  this  been  true  of 
France  and  Eussia.  But  as  yet  China  has  not  conceded  the  principle.  If 
the  system  of  profc^^s  were  recognized  the  question  would  arise  whether, 
in  such  cases,  the  plaintiffs  and  nationals  of  other  Treaty  Powers  would 
be  entitled  to  have  their  respective  consular  officials  sit  as  assessors,  just 
as  they  would  if  the  cases  were  tried  in  the  Chinese  courts. 

In  1873  the  United  States  Government  refused  to  permit  its  consul  at 
Canton  to  take  jurisdiction  in  the  case  of  a  criminal  charge  against  a 
citizen  of  a  Non-Treaty  Power  (New  Grenada)  even  though  he  had  con- 
sented thereto,  and  the  Chinese  authorities  had  waived  their  jurisdiction. 
Secretary  of  State  Fish  wrote  as  follows :  "  Mr.  Jewell  had  no  authority 
whatever  to  entertain  jurisdiction  of  the  case.  .  .  .  Under  the  laws  of  the 
United  States,  jurisdiction  in  a  criminal  case  cannot  be  conferred  by 
consent  even  in  one  of  the  established  courts  of  record  of  the  coxmtry. 


EXTRATEERITOEIALITY  25 

Controversies  between  Chinese  and  Treaty  Power 
Nationals.  It  is  with  reference  to  controversies  between 
Chinese  nationals  of  the  Treaty  Powers  that  the  principle 
of  extraterritoriality  finds  direct  application. 

Here  the  general  doctrine  is  that  the  jurisdiction,  both 
civil  and  criminal,  is  in  the  tribunals  of  the  defendant 
and  the  law  applied  is  that  of  his  own  country.  ^"^  This 
doctrine,  it  is  to  be  observed,  applies  not  only  in  the 
Treaty  Ports  where  foreigners  are  permitted  to  reside, 
lease  lands,  erect  houses  and  carry  on  trade  and  manu- 
facturing, but  also  throughout  China.  This  means  that 
no  matter  where  the  offense  is  committed,  if  the  matter 
be  a  criminal  one,  or  where  the  foreign  defendant 
happens  to  be,  the  matter  must  be  taken  before  his  Consul 
or  other  authorized  official  of  his  Government,  although 
the  nearest  one  may  be  hundreds  of  miles  away.  The 
difficulties  thus  involved  in  supplying  witnesses  and  other 
information  are  evident.    In  civil  suits  there  is  also  the 

Much  less  is  this  the  case  with  the  consular  court,  which  is  a  tribtmal  of 
limited  and  inferior  jurisdiction,  possessing  only  such  powers  as  are 
expressly  conferred  by  acts  of  Congress  in  conformity  with  the  provisions 
of  existing  treaties.  The  waiver  of  their  authority  in  the  matter  by  the 
Chinese  officials  invested  the  consul  with  no  new  or  additional  powers. 

"  In  Oriental  countries  where,  in  order  to  preserve  to  citizens  of  the 
United  States,  as  far  as  possible,  the  personal  rights  recognized  as  belong- 
ing to  them  in  their  own  country,  it  is  found  necessary  to  have  these  rights 
and  the  privileges  that  pertain  to  them  precisely  defined  by  treaty  stipula- 
tion, it  becomes  all  the  more  necessary  that  officers  of  the  United  States 
resident  in  those  countries  should,  in  the  exercise  of  their  fimctions,  confine 
themselves  strictly  within  the  powers  guaranteed  by  treaty  stipulation  and 
regulated  by  settled  principles  of  public  law.  Such  a  course  on  their  part 
will  not  only  tend  to  prevent  vmpleasant  complications,  but  do  much  to 
secure  from  the  people  of  those  countries  respect  for  the  rights  of  American 
citizens  resident  therein."    U.  8.  For.  Rels.,  1873,  Vol.  I,  p.  139. 

"  The  special  problems  presented  by  the  so-called  mixed  courts  in  which 
cases  brought  by  foreigners  against  Chinese  defendants  are  heard,  will  be 
considered  later  on  in  this  chapterr 


26      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

serious  disadvantage  that  it  is  not  possible  to  consider 
counter-claims  in  the  same  suit,  for,  as  to  these,  the 
foreign  defendant  becomes  substantially  the  plaintiff 
and,  therefore,  the  matter  is  one  over  which  the  Chinese 
courts  have  exclusive  jurisdiction. 

By  accepting  employment  under  the  Chinese  Govern- 
ment a  foreigner  does  not  waive  his  extraterritorial 
rights.  However,  it  would  appear  that,  in  the  Maritime 
Customs  at  least,  a  foreign  employee  charged  with  a 
serious  criminal  offense  is  expected  to  resign  and  report 
to  his  consul,  but,  if  acquitted  before  him,  is  allowed  to 
resume  his  office  with  full  pay  for  the  period  of  his 
resignation.^^ 

It  will  be  observed  that,  when  a  Chinese  is  plaintiff,  or 
the  matter  concerns  a  violation  of  the  criminal  law  by  a 
national  of  a  Treaty  Power,  the  Chinese  Government  has 
the  right  to  have  a  representative  present  at  the  trial  to 
see  that  due  justice  is  done.  We  have  the  authority  of 
Mr.  Morse,  however,  that  this  right  is  not  ordinarily 
used.  He  says:  **  This  is  the  theory.  In  practice,  the 
Chinese  have  seldom  sent  representatives  to  sit  on  the 
bench  in  the  foreign  courts,  since  it  has  been  generally 
recognized  that  the  judgments  rendered  there  are  based 
on  the  law  and  the  evidence.'*  *^ 

Koreans  in  Chientao,  Special  Status  of.  By  an  agree- 
ment of  1909  between  China  and  Japan  a  rather  special 
status  is  given  to  Koreans  taking  up  residence  in  Chinese 
territory  north  of  the  Tumen  River.     This  agreement 

"  See  letter  of  Acting  Secretary  of  State  Hill  to  Minister  Angell  at 
Peking,  August  16,  1881,  TJ.  B.  For.  Rels.,  1881-82,  p.  286. 
*•  Trade  and  Administration  of  China,  p.  200. 


EXTEATEREITOEIALITY  27 

provides  that  Koreans  established  in  this  area,  engaged 
in  cultivating  the  land,  shall  be  permitted  to  remain  there 
and  be  subject  to  the  jurisdiction  of  the  local  Chinese 
officials.  These  **  shall  treat  the  Koreans  and  Chinese 
with  equality  as  regards  payment  of  taxes  and  in  the 
enforcement  of  the  laws.  Chinese  officials  shall  admin- 
ister Chinese  law  in  all  civil  and  criminal  cases  where 
Koreans  are  concerned.  A  Japanese  Consular  official 
may  at  all  times  attend  the  court  proceedings.  In  cases 
where  capital  punishment  may  be  adjudged,  the  Japanese 
Consul  must  be  notified.  If  the  Japanese  Consul  can 
point  out  any  irregularities  in  the  proceedings,  he  may 
request  that  another  official  be  appointed  to  hold  a 
rehearing  of  the  case,  so  that  justice  may  be  obtained." 
It  is  also  expressly  provided  that  Koreans  shall  have  the 
same  protection  for  their  property  as  is  accorded  the 
Chinese ;  that  moorings  for  their  boats  shall  be  provided ; 
and  that  they  may  pass  at  will  from  place  to  place,  but 
shall  not  be  permitted  to  cross  the  frontier  with  arms 
except  with  a  special  pass.  They  are  also,  except  in  times 
of  special  stress,  to  be  allowed  to  send  out  of  the  country 
their  grain,  straw,  and  fuel.^" 

Extraterritorial  Courts.  The  extraterritorial  jurisdic- 
tion possessed  by  the  Treaty  Powers  in  China  is  exer- 
cised, in  the  main,  by  consular  officials,  by  diplomatic 
officials  at  Peking  (upon  appeal  from  the  consular 
courts)  and,  in  the  case  of  Great  Britain,  by  the  British 
Supreme  Court  for  China,  and,  in  the  case  of  the  United 
States,  by  the  United  States  Court  for  China.    Of  the 

^Customs  Treaties,  u,  p.  768;  MacMurray,  No.  1909/10. 


28      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

jurisdiction  and  operation  of  these  tribunals  the  follow- 
ing is  a  brief  description. 

Consular  Courts.  All  of  the  Treaty  Powers  authorize 
their  consular  officials  to  exercise  jurisdiction  in  civil  or 
criminal  cases  to  which  their  nationals  are  parties 
defendant.  In  this  place  we  shall  deal  in  detail  only  with 
the  powers  and  procedure  of  the  American  courts,  but, 
mutatis  mutandis,  the  account  will  fit  the  consular 
tribunals  of  the  other  Treaty  Powers. 

American  Courts  in  China.  By  the  treaty  of  July  3, 
1844,  negotiated  and  drafted  by  Caleb  Gushing  and 
signed  at  Wanghia,  to  which  reference  has  earlier  been 
made,  the  United  States,  following  the  example  set  by 
Great  Britain  in  1842,  demanded  and  obtained  an  extra- 
territorial status  for  American  citizens  in  China.  The 
rights  thus  obtained  were  broadened  in  the  treaty  of 
1858  and  later  treaties,  and,  of  course,  under  the  most 
favored  nation  clause,  American  citizens  in  China  became 
entitled  to  rights  granted  by  China  to  the  other  Powers. 

In  order  to  give  the  necessary  statutory  authority  to 
American  consuls  to  exercise  the  judicial  functions 
permitted  by  the  treaty  of  1844,  Congress  passed  the  act 
of  August  11,  1848.2^  It  will  not  be  necessary,  however, 
to  consider  the  provisions  of  this  act,  since  they  were 
soon  replaced  by  those  of  the  act  of  June  22, 1860.^^  This 
act  was  again  modified  by  the  acts  of  July  28, 1866,^^  and 
of  July  1, 1870 ;  2*  and  the  substance  of  these  laws  is  now 

"IX  Statutes  at  Large,  p.  276. 
**  Xn  Statutes  at  Large,  p.  72. 
»  XIV  Statutes  at  Large,  p.  322. 
**  XVI  Statutes  at  Large,  p.  184. 


EXTRATEKRITOEIALITY  29 

to  be  found  in  Sections  4083-4130  of  the  Eevised  Statutes. 
Since  the  enactment  of  the  Eevised  Statutes  the  only 
important  acts  of  Congress  relating  to  the  exercise  of 
extraterritorial  rights  in  China  have  been  those  of  June, 
1906,  establishing  the  United  States  Court  for  China ;  ^^ 
a  provision,  in  the  Diplomatic  and  Consular  Appro- 
priation Act  of  March  2,  1909,  according  to  which  the 
judicial  power  vested  in  the  Consul-General  at  Shanghai 
is  vested  in  the  Vice-Consul  General;  and  another  pro- 
vision in  the  Diplomatic  and  Consular  Appropriation 
Act  of  March  4,  1915,  vesting  the  same  power  in  the 
Vice-Consul  at  Shanghai. 

In  the  paragraphs  which  follow  we  shall  speak  first  of 
the  judicial  powers  exercised  generally  by  American 
consuls  in  China  and  then  consider  the  reasons  leading 
to  the  establishment,  in  1906,  of  the  United  States  Court 
for  China. 

American     Consular     Courts:      Stati^ory     Provisions. 

Under  the  laws  of  1860,  1866,  and  1870  and  embodied  in 
the  Revised  Statutes,  the  American  consuls  and  the 
American  Minister  at  Peking  were  authorized  to  exercise 
the  jurisdiction  permitted  by  the  treaties  with  China. 

They  were  authorized  to  arraign  and  try  all  citizens  of 
the  United  States  charged  with  offenses  against  the  law 
and  to  issue  all  the  necessary  writs  and  processes. 

In  civil  causes  they  were  invested  "  with  all  the  judi- 
cial authority  ijiecessary  to  execute  the  provisions  of  such 
treaties,  respectively,  in  regard  to  civil  rights  whether  of 
property  or  person." 

» XXXIV  statutes  at  Large,  p.  814. 


30      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

As  regards  the  law  to  be  applied,  Section  4086  of  the 
Kevised  Statutes  provides: 

Jurisdiction  in  both  criminal  and  civil  matters  shall,  in  all  cases, 
be  exercised  and  enforced  in  conformity  with  the  laws  of  the 
United  States,  which  are  hereby,  so  far  as  is  necessary  to  execute 
such  treaties,  respectively,  and  so  far  as  they  are  suitable  to  carry 
the  same  into  effect,  extended  over  all  citizens  of  the  United  States 
in  those  countries,  and  over  all  others  to  the  extent  that  the  terms 
of  the  treaties,  respectively,  justify  or  require.  But  in  all  cases 
where  such  laws  are  not  adapted  to  the  object,  or  are  deficient  in  the 
provisions  necessary  to  furnish  suitable  remedies,  the  common  law 
and  the  law  of  equity  and  admiralty  shall  be  extended  in  like 
manner  over  such  citizens  and  others  in  those  countries;  and  if 
neither  the  common  law,  nor  the  law  of  equity  or  admiralty,  nor 
the  Statutes  of  the  United  States,  furnish  appropriate  and  sufficient 
remedies,  the  ministers  in  those  countries,  respectively,  shall,  by 
decrees  and  regulations  which  shall  have  the  force  of  law,  supply 
such  defects  and  deficiencies.^" 

By  Section  4106  of  the  Revised  Statutes  it  is  provided 
that  the  consul,  whenever  he  is  of  opinion  that,  by  reason 
of  the  legal  questions  which  may  arise,  assistance  will  be 
useful  to  him,  or  whenever  he  is  of  opinion  that  severe 
punishments  will  be  required,  shall  summon  to  sit  with 
him  on  the  trial,  one  or  more  American  citizens,  not 
exceeding  four,  and,  in  capital  cases,  not  less  than  four, 
who  shall  be  taken  by  lot  from  a  list  previously  prepared 
by  him  and  approved  by  the  American  Minister.  The 
consul,  in  such  cases,  gives  the  judgment,  but  the  asso- 
ciates are  required  to  record  their  several  judgments  and 
opinions.  If  the  consul  and  his  associates  concur,  the 
decision  rendered  is  final,  except  as  to  cases  in  which,  by 
other  sections  of  the  law,  a  right  of  appeal  is  given.    If 

"This  paragraph  was  taken  from  the  law  of  1860. 


EXTEATERRITORIALITY  31 

any  of  the  associates  differ  in  opinion  from  the  consul 
the  case,  without  further  proceedings,  together  with  the 
evidence  and  opinions,  is  referred  to  the  Minister  for  his 
adjudication. 

Further  sections  from  the  Eevised  Statutes  which 
cannot  be  satisfactorily  summarized  are  given  in  extenso 
in  an  Appendix  to  this  chapter. 

An  inspection  of  these  provisions  makes  it  clear  that 
the  administration  of  justice  through  consular  officials, 
in  a  country  like  China,  is  not  without  its  difficulties, 
some  of  which  will  be  more  particularly  referred  to  in  a 
later  section  in  which  will  be  discussed  the  desirability, 
from  the  standpoint  of  the  interests  of  foreign  Powers, 
as  well  as  from  that  of  the  welfare  of  China,  of  getting 
rid  of  the  whole  system  of  extraterritoriality. 

The  United  States  Court  for  China.  In  1906,  without 
touching  tOie  system  of  extraterritoriality  itself,  Congress 
endeavored  to  correct,  in  part  at  least,  certain  of  the 
evils  which  were  not  ineradicably  inherent  in  the  system. 
These  corrigible  evils  were  those  connected  with  the 
diversities  of  practice  and  doctrines  of  the  different 
consular  courts ;  with  the  fact  that  these  courts  are  held 
by  officials  untrained  in  the  law ;  and  with  the  matter  of 
appeals  to  the  Minister  at  Peking  and  to  the  Federal 
Circuit  Court  for  the  District  of  California.  These  im- 
provements in  the  system  were  embodied  in  the  Act  of 
June  30, 1906,  entitled  "An  Act  Creating  a  United  States 
Court  and  Prescribing  the  Jurisdiction  thereof."  The 
more  important  portions  of  this  statute  will  be  quoted  or 
summarized.  2'^ 

"  XXXIV  statutes  at  Large,  Pt.  i,  p.  814. 


33      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Be  it  enacted,  etc.  .  .  .  That  a  court  is  hereby  established,  to  be 
caUed  the  United  States  Court  for  China,  which  shall  have 
exclusive  jurisdiction  in  all  cases  and  judicial  proceedings  whereof 
jurisdiction  may  now  be  exercised  by  United  States  consuls  and 
ministers  by  law  and  by  virtue  of  treaties  between  the  United  States 
and  China,  except  so  far  as  the  said  jurisdiction  is  qualified  by 
Section  2  of  this  Act.  The  said  court  will  hold  sessions  at 
Shanghai,  China,  and  shall  also  hold  sessions  at  the  cities  of 
Canton,  Tientsin,  and  Hankow  at  stated  periods,  the  dates  of  such 
sessions  at  each  city  to  be  announced  in  such  manner  as  the  court 
shall  direct,  and  a  session  of  the  court  shall  be  held  in  each  of  these 
cities  at  least  once  annually.  It  shall  be  within  the  power  of  the 
judge,  upon  due  notice  to  the  parties  in  litigation,  to  open  and  hold 
court  for  the  hearing  of  a  special  cause  at  any  place  permitted  by 
the  treaties,  and  where  there  is  a  United  States  consulate,  when, 
in  his  judgment,  it  shall  be  required  for  the  convenience  of  wit- 
nesses, or  by  some  public  interest.  The  place  of  sitting  of  the  court 
shall  be  in  the  United  States  Consulate  at  each  of  the  cities, 
respectively. 

Section  2  of  the  Act,  which  qualifies  the  exclusive  juris- 
diction vested  by  the  first  section  in  the  United  States 
Court,  provides  that  the  consuls  in  China  shall  have  the 
same  jurisdiction  they  had  previously  possessed  in  civil 
cases  not  involving  more  than  $500  of  money  or  property, 
and  in  criminal  cases  where  the  punishment  for  the 
offense  charged  cannot  exceed  $100  fine  or  sixty  days' 
imprisonment,  or  both;  and  that  they  shall  have  the 
power  to  arrest,  examine  and  discharge  accused  persons 
or  commit  them  to  the  United  States  Court. 

From  the  final  judgments  of  the  consular  courts  either 
party  may  appeal  to  the  United  States  Court. 

To  the  United  States  Court  is  also  given  "  supervisory 
control  over  the  discharge  by  consuls  and  vice-consuls  of 
the  duties  prescribed  by  the  laws  of  the  United  States 


EXTEATERRITORIALITY  33 

relating  to  the  estates  of  decedents  in  China."  In  order 
that  this  supervisory  control  may  be  effectively  exercised, 
the  Act  of  1906  goes  on  to  provide  that  inventories  of 
estates  shall  be  filed  by  the  consuls  and  vice-consuls  with 
the  Clerk  of  the  Court,  together  with  schedules  of  debts 
of  the  decedents ;  and  that  no  payments  of  claims  against 
these  estates  or  sales  of  property  belonging  thereto  shall 
be  made  without  the  approval  of  the  judge  of  the  Court. 
Other  provisions  of  the  act  relate  to  the  rendering  of 
reports,  the  giving  of  special  bond,  etc. 

Section  3  of  the  act  relates  to  appeals  from  the  United 
States  Court  and  reads,  in  part,  as  follows : 

That  appeals  shall  lie  from  all  final  judgments  or  decrees  of  the 
said  court  to  the  United  States  Circuit  Court  of  Appeals  of  the 
ninth  judicial  circuit,  and  thence  appeals  and  writs  of  error  may 
be  taken  from  the  judgments  or  decrees  of  the  said  Circuit  Court 
of  Appeals  to  the  Supreme  Court  of  the  United  States  in  the  same 
class  of  cases  as  those  in  which  appeals  and  writs  of  error  are 
permitted  to  judgments  of  said  Court  of  Appeals  in  cases  coming 
from  district  and  circuit  courts  of  the  United  States. 

By  Section  5  of  the  act  it  is  provided  that  the  pro- 
cedure of  the  court  shall  be  in  conformity  with  existing 
rules  governing  the  consular  courts  in  China,  but  that 
*'  the  judge  of  the  said  United  States  Court  for  China 
shall  have  authority  from  time  to  time  to  modify  and 
supplement  said  rules  of  procedure. ' ' 

The  act,  in  its  remaining  sections,  makes  provision 
for  a  district  attorney,  a  marshal,  and  a  clerk  of  the 
court,  and  for  their  salaries.  The  tenure  of  the  judge  is 
fixed  at  ten  years.  The  judge  and  district  attorney  must 
be  lawyers  of  good  standing  and  experience  and  are  to 
be  appointed  by  the  President  by  and  with  the  consent 
of  the  Senate. 
3 


34      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

With  regard  generally  to  the  jurisdiction  of  the  court, 
it  may  be  observed  that,  territorially,  it  extends  through- 
out China;  and  that,  as  regards  parties,  while  anyone 
may  be  a  plaintiff,  the  defendant  must  be  of  American 
nationality.^* 

In  the  opinion  rendered  by  the  Supreme  Court  of  the 
United  States  in  the  case  In  re  Ross  (also  sometimes 
cited  as  Ross  vs.  Mclntyre)  ^^  the  constitutional  powers 
of  Congress,  legislating  for  the  enforcement  of  treaty 
rights,  to  vest  judicial  powers  in  consuls  or  other  officials 
stationed  in  foreign  countries,  is  carefully  considered. 
In  that  case  one  of  the  questions  was  as  to  whether  the 
accused,  who  was  charged  with  murder  committed  on 
board  of  an  American  ship  in  the  harbor  of  Yokohama, 
Japan,  had  the  right  to  claim  the  guarantees  of  the 
United  States  Constitution  with  regard  to  indictment  by 
a  grand  jury  and  trial  by  a  petit  jury.  The  denial  that 
he  had  the  right  to  claim  these  privileges  the  Supreme 
Court  based  upon  the  assertion  that,  "  By  the  Constitu- 
tion a  government  is  ordained  and  established  *  for  the 
United  States  of  America,*  and  not  for  countries  outside 
their  limits.  The  guaranties  it  affords  against  accusa- 
tion of  capital  or  infamous  crimes,  except  by  indictment 
or  presentment  by  a  grand  jury,  and  for  an  impartial 
trial  by  a  jury,  when  thus  accused,  apply  only  to  citizens 
and  others  within  the  United  States,  or  who  are  brought 
there  for  trial  for  alleged  offenses  committed  elsewhere, 
and  not  to  residents  or  temporary  sojourners  abroad. 

*  When  the  action  is  in  rem,  that  is,  concerning  status  or  property  alone, 
this  is  not  necessary.  See  Richards  vs.  Richards,  U.  S.  Court  for  China, 
No.  424. 

»140U.  S.  453  (1881). 


EXTEATEERITOEIALITY  35 

The  Constitution  can  have  no  operation  in  another  coun- 
try. When,  therefore,  the  representatives  or  ofl&cers  of 
our  Government  are  permitted  to  exercise  authority  of 
any  kind  in  another  country,  it  must  be  on  such  conditions 
as  the  two  countries  may  agree,  the  laws  of  neither  one 
being  obligatory  upon  the  other/' 

His    Britannic    Majesty's    Supreme    Court    for    China. 

Great  Britain  is  the  one  other  country  besides  the  United 
States  which  has  seen  fit  to  establish  in  China  a  tribunal 
which  win  supply  a  more  dignified  and  technically  correct 
mode  of  administering  justice  than  can  possibly  be  sup- 
plied by  the  consular  courts. 

This  court  was  established  by  an  Order  in  Council  of 
October  24,  1904.30 

This  Order  in  Council  was  not  simply  one  for  the  estab- 
lishment of  the  Supreme  Court,  but  to  revise  earlier 
orders  and  to  provide,  in  effect,  a  code  of  law,  substantive 
as  well  as  procedural,  for  the  administration  of  British 
judicial  authority  in  China  and  Korea.^^  It  will,  there- 
fore, not  be  practicable  to  do  more  than  summarize  a  few 
of  the  more  important  features  of  this  detailed  measure. 

The  order  provides  for  a  Supreme  Court  sitting  ordi- 
narily at  Shanghai,  and  Consular,  or,  as  they  are  termed, 
''  Provincial  Courts,"  sitting  at  the  cities  where  British 
consulates  are  maintained.  All  these  courts  are  courts 
of  record. 

The  Supreme  Court,  termed  "  His  Britannic  Majesty's 
Supreme  Court  for  China  (and  Korea)"  is  composed  of 

*"  The  text  of  this  order  may  be  found  in  British  and  Foreign  State 
Papers,  Vol.  97,  pp.  150-209,  and  also  in  Hertslet's  China  Treaties,  n,  834. 
"  The  Order,  of  course,  no  longer  has  any  force  in  Korea. 


36      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

a  judge  and  as  many  assistant  judges  as  may  be  from 
time  to  time  required,  which  judges  are  to  be  appointed 
by  the  King,  to  hold  office  during  his  pleasure,  and  must 
be  members  of  the  Bar  of  England,  Scotland,  or  Ireland, 
of  not  less  than  seven  years  standing.  Two  judges  con- 
stitute a  quorum. 

To  the  Supreme  Court  is  given  exclusive  original  juris- 
diction, civil  as  well  as  criminal,  for  the  district  of  the 
consulate  of  Shanghai,  and  concurrent  jurisdiction,  civil 
and  criminal,  with  the  Provincial  Consular  Courts  in 
other  parts  of  China. 

Further  defining  matters  of  jurisdiction  and  procedure, 
the  order  reads: 

Section  25.  Where  any  case,  civil  or  criminal,  commenced  in 
a  Provincial  Court,  aj^ears  to  that  court  to  be  beyond  its  juris- 
diction, or  to  be  one  which  for  any  other  reason  ought  to  be  tried 
in  the  Supreme  Court,  the  Provincial  Court  shall  report  the  case 
to  the  Supreme  Court  for  directions. 

The  Supreme  Court  may  of  its  own  motion,  or  upon  the  report 
of  a  Provincial  Court,  or  on  the  apphcation  of  any  party  concerned, 
require  any  case,  civil  or  criminal,  pending  in  any  Provincial  Court 
to  be  transferred  to,  or  tried  in,  the  Supreme  Court,  or  may  direct 
in  what  court  and  in  what  mode,  subject  to  the  provisions  of  this 
order,  any  euch  case  shall  be  tried. 

Section  26.  The  Supreme  Court  and  every  Provincial  Court 
shall  be  auxihary  to  one  another  in  all  particulars  relative  to  the 
administration  of  justice,  civil  or  criminal. 

Section  27.  Every  judge  and  officer  of  the  courts  estabhshed 
under  this  order  shall,  as  far  as  there  is  proper  opportunity,  pro- 
mote reconciUation  and  encourage  and  facilitate  the  settlement  in 
an  amicable  way  and  without  recourse  to  htigation,  of  matters  in 
difference  between  British  subjects,  or  between  British  subjects  and 
foreigners  in  China  (or  Korea). 

Juries  and  assessors  are  provided  for.  The  order  de- 
clares (Sections  32  and  33) : 


EXTEATERKITORIALITY  37 

A  jury,  shall  consist  of  such  number  of  jurors,  not  more  than 
twelve  nor  less  than  five,  as  may  be  determined  in  accordance  with 
Rules  of  Court.  .  .  . 

In  civil  and  criminal  cases  the  like  challenges  sliall  be  allowed 
as  in  England — with  this  addition :  that  in  civil  cases  each  party 
may  challenge  three  jurors  peremptorily. 

A  jury  shall  be  required  to  give  an  unanimous  verdict,  provided 
that,  with  the  consent  of  parties,  the  verdict  of  a  majority  may  be 
taken  in  civil  cases. 

An  assessor  shall  be  a  competent  and  impartial  British  subject  of 
good  repute,  nominated  and  summoned  by  the  court  for  the  purpose 
of  acting  as  assessor. 

In  the  Supreme  Court  there  may  be  one,  two  or  three 
assessors  as  the  court  thinks  fit. 

In  a  Provincial  Court  there  shall  ordinarily  be  not  fewer  than 
two  and  not  more  than  four  assessors.  Where,  however,  by  reason 
of  local  circumstances,  the  court  is  able  to  obtain  the  presence  of 
one  assessor  only,  the  court  may,  if  it  thinks  fit,  sit  with  one 
assessor  only;  and  where,  for  like  reasons,  the  court  is  not  able 
to  obtain  the  presence  of  an  assessor,  the  court  may,  if  it  thinks  fit, 
sit  without  an  assessor — ^the  court,  in  every  case,  recording  in  the 
minutes  its  reasons  for  sitting  with  one  assessor  only  or  without 
an  assessor. 

An  assessor  shall  not  have  any  voice  in  the  decision  of  the  court 
in  any  case,  civil  or  criminal;  but  an  assessor  dissenting,  in  a  civil 
case,  from  any  decision  of  the  court,  or  in  a  criminal  case,  from 
any  decision  of  the  court  or  the  conviction,  or  the  amount  of  punish- 
ment awarded,  may  record  in  the  minutes  his  dissent,  and  the 
grounds  thereof,  and  shall  be  entitled  to  receive  without  payment 
a  certified  copy  of  the  minutes. 

Cases  of  treason  or  murder,  it  is  provided,  must  be 
tried  on  a  charge  before  the  Supreme  Court  with  a  jury. 

In  cases  of  rape,  arson,  housebreaking,  robbery  with 
violence,  piracy,  forgery,  or  perjury,  and  other  cases 
where  it  appears  to  the  court,  before  trial,  that  the 


38      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

charge,  if  proved,  would  warrant  a  heavier  penalty  than 
three  months'  imprisonment  with  hard  labor  or  a  fine 
of  £20,  or  both,  the  trial  must  be  on  charge  with  a  jury 
or  assessors,  but  may,  with  the  consent  of  the  accused, 
be  tried  without  assessors  or  jury.  In  the  Supreme 
Court,  when  the  accused  does  not  so  consent,  the  charge 
must  be  by  a  jury  unless  the  court  is  of  opinion  that  a 
jury  cannot  be  obtained. 

The  Supreme  Court  may,  for  any  special  reason,  direct  that  any 
case  shall  be  tried  with  assessors  or  a  jury,  and  a  Provincial  Court 
may,  for  any  special  reason,  direct  that  any  case  shall  be  tried  with 
assessors.  In  each  such  case  the  special  reasons  shall  be  recorded 
in  the  minutes. 

Summary  trial  of  minor  offenses,  that  is,  without 
necessity  of  charging,  is  provided  for,  but  no  greater 
punishment  may  be  awarded  than  imprisonment  for  three 
months  or  a  fine  of  £20,  or  both. 

The  order  lays  down  detailed  requirements  regarding 
preliminary  examinations  of  persons  accused  of  crime, 
the  presentation  of  charges  of  crime,  of  the  punishments 
that  may  be  awarded,  inquests,  apprehension  and  custody 
of  accused  persons,  bail,  local  jurisdiction,  etc. 

The  order  enumerates  a  number  of  acts  which  are  to 
be  deemed  crimes  if  committed  in  China,  but  provides 
generally  (Section  35) : 

Except  as  regards  offenses  made  or  declared  such  by  this  or  any 
other  order  relating  to  China  or  Korea,  or  by  any  rules  or  regula- 
tions made  under  any  order.  .  .  . 

Any  act  that  would  not  by  a  Court  of  Justice  having  criminal 
jurisdiction  in  England  be  deemed  an  offense  in  England,  shall 
not,  in  the  exercise  of  criminal  jurisdiction  under  this  order  be 
deemed  an  offense,  or  be  the  subject  of  any  criminal  proceeding 
under  this  order. 


EXTEATEEBITORIALITY  39 

Subject  to  the  provisions  of  this  order,  criminal  jurisdiction 
under  this  order,  shall,  as  far  as  circumstances  admit,  be  exercised 
on  the  principles  of,  and  in  conformity  with,  English  law  for  the 
time  being,  and  with  the  powers  vested  in  the  Courts  of  Justice 
and  Justices  of  the  Peace  in  England,  according  to  their  respective 
jurisdiction  and  authority. 

In  criminal  cases  appeals  may  be  taken  by  the  accused 
from  a  Provincial  to  the  Supreme  Court. 

The  full  Supreme  Court  [i.  e.,  two  or  more  judges  on  the  bench] 
sitting  without  a  jury  or  assessors,  shall  hear  and  determine  the 
matter,  and  thereupon  shall  reverse,  affirm,  or  amend  the  judgment 
given,  or  set  it  aside,  and  order  an  entry  to  be  made  in  the  minutes 
that,  in  the  judgment  of  the  Supreme  Court,  the  person  ought  not 
to  have  been  convicted,  or  order  judgment  to  be  given  at  a  subse- 
quent sitting  of  the  Provincial  Court,  or  order  a  new  trial,  or  make 
such  other  order  as  the  Supreme  Court  thinks  just,  and  shall  also 
give  all  necessary  and  proper  consequential  directions  (Section  85). 

There  shall  be  no  appeal  in  a  criminal  case  to  His  Majesty  the 
King  in  Council  from  a  decision  of  the  .Supreme  Court,  except  by 
special  leave  of  His  Majesty  in  Council  (Section  87). 

Procedure  in  civil  matters  is  dealt  with  by  the  order 
in  separate  parts  dealing  respectively  with  Arbitration, 
Bankruptcy,  Admiralty,  Matrimonial  Causes,  Lunacy 
and  Probate,  and  Administration.  The  law  to  be  applied 
with  regard  to  Mortgages  and  Bills  of  Sale  is  set  forth 
with  some  particularity.  But,  in  general,  with  regard  to 
the  substantive  law,  it  is  declared  (Section  89)  that — 

Subject  to  the  provisions  of  this  order,  the  civil  jurisdiction  of 
every  court  acting  under  this  order  shall,  as  far  as  circumstances 
admit,  be  exercised  on  the  principles  of,  and  in  conformity  with, 
English  law  for  the  time  being  in  force. 

In  cases  involving  more  than  £25,  appeals  may  be  taken 
as  of  right  from  the  Provincial  Courts  to  the  Supreme 


40      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Court.  In  other  cases  leave  to  appeal  may  be  given  by 
the  Provincial  or  by  the  Supreme  Court  in  its  discretion. 
Where  more  than  £500  is  involved,  the  aggrieved  party 
may  apply  on  motion  to  the  Supreme  Court  for  leave  to 
appeal  to  His  Majesty  in  Council;  or  the  Supreme  Court 
in  other  cases,  if  it  deems  it  just  or  expedient  to  do  so, 
may  give  leave  to  appeal  to  the  Privy  Council. 

In  all  civil  cases  juries  may  be  used  at  the  suggestion 
of  the  parties  or,  if  deemed  desirable,  by  the  court.  In 
suits  in  the  Supreme  Court  involving  £150  or  over,  the 
cases  must  be  heard  with  a  jury  if  asked  for  by  either 
party  seven  days  before  the  day  appointed  for  the  hear- 
ing. The  Supreme  Court  may,  if  it  thinks  fit,  hear  any 
action  with  assessors.  Provincial  Courts  are  obliged  to 
hear  with  assessors  actions  involving  £150  or  more,  and 
may,  in  their  discretion,  hear  with  assessors  in  other 
cases. 

To  the  British  Minister  to  China  is  given  authority  to 
make  regulations  (termed  '*  King's  Regulations  ")  with 
regard  to  the  following  matters  (Section  155) : 

(a)  For  the  peace,  order,  and  good  government  of  British 
subjects  in  relation  to  matters  not  provided  for  by  this  order,  and 
to  matters  intended  by  this  order  to  be  prescribed  by  regulation. 

(6)  For  securing  the  observance  of  any  treaty  for  the  time  being 
in  force  relating  to  any  place,  or  of  any  native  or  local  laws  or 
custom,  whether  relating  to  trade,  commerce,  revenue,  or  any  other 
matter. 

(c)  For  regulating  or  preventing  the  importation  or  exportation 
in  British  ships  or  by  British  subjects  of  arms  or  munitions  of  war, 
or  any  parts  or  ingredients  thereof,  and  for  giving  effect  to  any 
treaty  relating  to  the  importation  or  exportation  of  the  same. 

(d)  For  requiring  returns  to  be  made  of  the  nature,  quantity, 
and  value  of  articles  exported  from  or  imported  into  his  district, 
or  any  part  thereof,  by  or  on  account  of  any  British  subject  who 


EXTRATERRITORIALITY  41 

is  subject  to  this  order,  or  in  any  British  ship,  and  for  prescribing 
the  times  and  manner  at  or  in  whicTi,  and  the  persons  by  whom, 
such  returns  are  to  be  made. 

Regulations,  made  or  adopted,  under  the  order  do  not 
go  into  force,  except  in  emergencies,  until  approved  by 
the  British  Crown,  and  published  by  the  British  Minister 
at  Peking. 

Finally,  Section  160  deserves  quotation.    It  reads : 

Nothing  in  this  order  shall  deprive  the  [Supreme]  Court  of  the 
right  to  dbserve,  and  to  enforce  the  observance  of,  or  shall  deprive 
any  person  of  the  benefit  of,  any  reasonable  custom  existing  in 
China  (or  Korea),  unless  this  order  contains  some  express  and 
specific  provision  incompatible  with  the  observance  thereof. 

The  Law  Enforced  in  the  Eirtraterritorial  Courts.    The 

question  as  to  the  substantive  law  to  be  enforced  in  the 
consular  and  other  extraterritorial  courts  in  China  has 
been  by  no  means  a  simple  one.  Upon  the  part  of  the 
Chinese  it  has  been  argued  that  this  law  should  be  that 
of  China,  thus  limiting  the  scope  of  the  extraterritorial 
privilege  enjoyed  by  foreign  defendants  to  the  right  to 
have  his  rights  or  obligations,  as  determined  by  the  local 
law,  adjudicated  upon  by  officials  of,  and  according  to 
judicial  procedures  sanctioned  by,  the  laws  of  their  own 
respective  countries.  Upon  the  part  of  foreigners  it  has 
been  argued  that  their  own  laws,  substantive  as  well  as 
procedural,  should  be  applied  by  the  extraterritorial 
tribunals ;  qualified,  however,  by  the  admission  that  there 
is  an  obligation  upon  the  part  of  these  tribunals  to 
enforce  local  police  and  other  laws,  especially  laws 
regarding  real  property,  so  far  as  these  laws  are  reason- 
able and  are  not  inconsistent  with  the  laws  of  the 
defendant's  country. 


42      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  problem  thus  presented  is  stated,  and  a  reasonable 
line  of  action  to  be  taken  by  foreigners  is  suggested,  in 
an  able  memorandum,  prepared  in  1879,  by  George  F. 
Seward,  American  Minister  at  Peking,  and  sent  to  the 
Secretary  of  State  at  Washington.^^    j^f  j.  Seward  says : 

It  is  true  that  of  late  the  Chinese  Government  has  advanced  the 
proposition  that  the  extraterritorial  privileges  of  foreigners  extend 
only  so  far  as  to  give  them  the  right  of  being  tried  in  their  own 
courts,  and  of  being  condemned  according  to  the  remedies  to  be 
found  in  their  own  laws ;  but  that  the  laws  of  the  [Chinese]  Empire 
are,  nevertheless,  supreme,  and  that  foreigners  are  as  much  bound 
to  respect  them  as  natives. 

While  it  may  be  admitted  at  once  that  justice  and  fair  dealing 
require  that  foreigners  offending  against  laws  rendered  necessary 
in  China,  as  well  as  elsewhere,  by  a  right  regard  to  the  safety  and 
convenience  of  the  communities  in  which  they  reside  and  of  the 
government  upon  whose  soil  they  stand,  should  be  punished  for 
their  offenses,  it  appears  diflBcult  to  admit  the  broad  preposition 
that  they  are  amenable  to  Chinese  law  in  the  same  sense  as  natives 
of  China  are,  or  in  point  of  fact,  in  any  sense  which  would  allow 
us  to  assent  to  the  Chinese  proposition. 

The  case  indicated  in  the  Chinese  circular  of  March,  1878,  will 
illustrate  the  point.^'    It  is  argued  that  if  a  given  street  or  passage 

"  U.  8.  For.  Rels.,  1880,  p.  146. 

"In  this  Circular  sent  by  the  Chinese  Foreign  Office  (Tsiing-li  Yamen) 
to  Chinese  ministers  abroad,  the  following  is  the  paragraph  referred  to: 

"As  regards  jurisdiction,  i.  e.,  extraterritoriality,  by  the  treaties,  for- 
eigners in  China  are  not  amenable  to  the  jurisdiction  of  the  Chinese  author- 
ities, i.  e.,  they  are  extraterritorialized.  As  they  have  disputes  among 
themselves,  their  own  authorities  are  to  settle  them;  if  they  commit  an 
offense,  their  own  authorities  are  to  punish  them  according  to  their  own 
national  laws.  But  foreigners  claim  much  more  than  this;  they  interpret 
this  extraterritorial  privilege  as  meaning  not  only  that  Chinese  officials 
are  not  to  control  them,  but  that  they  may  disregard  and  violate  Chinese 
regulations  with  impimity.  To  this  we  cannot  assent.  China  has  not  by 
any  treaty  given  foreigners  permission  to  disregard  or  violate  the  laws  of 
China;  while  residing  in  China  they  are  as  much  bound  to  observe  them 
as  Chinese  are.     What  has  been  conceded  in  the  treaties  in  this  connection 


EXTEATEERITORIALITY  43 

is  closed  to  the  Chinese,  and  they  may  be  punished  for  entering  it, 
foreigners  must  be  subject  to  the  same  restriction. 

It  will  be  admitted  at  once  on  the  foreign  side  that  it  is  not 
lawful  for  the  foreigner  to  use  the  given  street,  and  that  he  may  be 
proceeded  against  in  case  he  does  so.  But  there  is  a  great  divergence 
between  the  treatment  that  he  may  expect  and  that  which  would  be 
meted  out  against  Chinese,  for  the  prosecution  in  the  one  place 
would  take  the  form  probaibly  of  a  civil  action  for  damages,  while 
the  Chinese  offending  would  be  dealt  with  criminally.  Or,  if  it 
should  happen  that  the  laws  of  the  country  of  the  given  foreigner 
would  permit  of  a  criminal  prosecution,  it  is  quite  certain  that  the 
punishment  inflicted  would  be  wholly  different  in  kind  and  in 
degree  from  that  to  which  the  native  is  subject. 

There  is,  of  course,  very  much  in  the  Chinese  code  which  is  bar- 
barous in  the  eyes  of  Western  people.  There  is  also  very  much 
that  is  singular  and  which  is  founded  upon  different  conceptions  of 
right  or  obligation  from  those  prevailing  in  the  West.  Chinese  law 
gives  to  parents,  for  instance,  far  broader  authority  over  their 
children  than  is  usual  with  us.  The  father  may,  it  is  said,  take 
the  life,  even,  of  a  worthless  or  depraved  son.  And  having  such 
authority  a  corresponding  responsibility  is  sought  to  be  imposed 
upon  him.  He  may  be  punished,  not  only  for  the  offenses  of  his 
child,  but  also  because  he  has  not  so  instructed  him  that  he  would 
not  offend.  So,  a  person  who  has  lost  property  by  theft  may  be 
punished  for  not  having  kept  such  a  watch  over  his  property  as  to 
prevent  its  loss. 

It  would  be  idle  to  say  that  in  such  and  similar  cases  foreigners 
offend  against  the  native  law,  and  that  it  is  the  duty  of  the  foreign 

is  merely  that  offenders  shall  be  punished  by  their  own  national  officials 
and  in  accordance  with  their  own  national  laws.  For  example,  if  Chinese 
law  prohibits  Chinese  from  going  through  a  certain  passage,  foreigners 
cannot  claim  to  go  through  that  forbidden  passage  in  virtue  of  extra- 
territoriality. If  they  go  through  it,  they  thereby  break  a  Chinese  law; 
their  own  national  officials  are  to  punish  them  in  accordance  with  such 
laws  as  provide  for  analogous  cases  in  their  own  country.  In  a  word,  the 
true  meaning  of  the  extraterritorial  clause  is,  not  that  a  foreigner  is  at 
liberty  to  break  Chinese  laws,  but  that  if  he  offends,  he  shall  be  pimished 
by  his  own  national  officials."    U.  8.  For.  ReU.,  1880,  p.  177. 


44      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

court  to  punish  them.  The  simple  truth  is  that  when  foreigners 
are  tried  in  their  own  courts  and  by  their  own  laws  no  indictments 
against  them  can  be  sustained  which  do  not  describe  offenses  which 
would  be  punishable  by  law  if  committed  at  home,  or  which  have 
been  made  punishable  by  some  provision  of  the  given  treaty  or 
enactment  made  in  pursuance  of  the  treaty. 

It  is  not  meant  by  this  to  assert  that  the  only  obligation  of 
foreigners  in  China  is  to  regard  the  laws  of  their  own  country.  In 
actual  practice  it  comes  to  this :  that  foreigners  are  bound  to  observe 
the  laws  of  the  [Chinese]  Empire  so  far  as  they  conform  to  the 
laws  of  their  own  country.  It  is  an  offense  against  China  to  commit 
a  murder  on  Chinese  soil.  It  would  not  be  an  offense  against  China 
if  it  was  not  against  the  law  in  China  to  do  murder.  The  person 
so  offending  may  be  arrested  by  the  Chinese,  and  they  have  the  right 
to  demand  that  he  shall  be  tried  and  punished ;  in  the  words  of  the 
treaty,  "  impartial  justice  shall  be  done  in  the  premises." 

This  principle  may  be  carried  further,  and  it  may  be  said  that 
we  are  bound  to  provide  remedies  in  cases  where  the  Chinese 
Government  declares  unlawful  certain  acts  which  are  not  them- 
selves criminal  but  which  become  so  in  consequence  of  enactments 
made  for  the  public  advantage.  It  cannot  be  said  that  throwing 
ballast  overboard  in  a  stream  is  in  itself  an  offense  against  law, 
but  the  throwing  overboard  of  ballast  in  a  stream  when  it  is 
prohibited  by  Chinese  law,  must  be  considered  an  improper  act,  an 
offense  against  the  nation,  and,  as  such,  we  are  under  obligation  to 
provide  a  remedy,  either  by  acknowledging  the  validity  of  the  law, 
adopting  it,  so  to  speak,  for  ourselves,  or  by  enacting  a  law  of  our 
own  to  meet  the  case.  .  .  . 

It  does  not  seem  necessary  or  possible  to  abandon  the  simple 
proposition  that  our  people  may  be  dealt  with  only  in  our  own 
courts  and  according  to  our  own  laws.  But  so  far  as  we  can  hold 
language  to  the  Chinese  which  will  indicate  that  we  stand  upon 
their  soil  in  an  attitude  of  respect  and  with  a  determination  to 
sustain  the  government  in  the  essential  attributes  of  sovereignty,  I 
think — and  in  so  holding  I  maintain  only  the  views  of  my  govern- 
ment— that  we  ought  not  to  withhold  such  language  nor  fail  to 
sustain  it  in  practice  by  appropriate  action  whenever  the  occasion 
may  arise. 


EXTEATEERITORIALITY  45 

In  a  later  communication,  Minister  Seward  expressed 
himself  upon  the  point  under  discussion  as  follows : 

My  own  view  is  that  we  cannot  deny  the  right  of  the  Chinese 
Government  to  make  rules  and  regulations  affecting  all  matters 
within  their  sovereignty,  "but  that  we  may  scrutinize  all  rules  and 
regulations  made  or  proposed  by  them  which  affect  our  nationals 
and  object  to  them  if  we  find  them  in  contravention  of  treaty 
stipulations,  or  suggest  their  withdrawal  or  modification  if  they 
appear  burdensome  or  unnecessary.  Holding  to  this  view,  I  think 
also  that  we  may,  without  offense,  endeavor  to  lead  the  Chinese  to 
communicate  to  us  in  advance  all  such  rules  and  regulations,  in 
order  that  we  may  examine  them  and  state  in  advance  of  their 
publication  whether  we  should  be  likely  to  complain  of  them  as  in 
contravention  of  our  treaties.^* 

Dr.  Koo  's  position  with  reference  to  this  subject,  which 
may  be  said  to  be  the  Chinese  position,  is  as  follows :  ^^ 

With  reference  to  the  Treaty  Powers  themselves,  it  may  be  said 
that  extraterritoriality  entitles  them  to  exercise  so  much  authority 
over  their  nationals  in  China  as  is  necessary  to  enforce  effectively, 
by  judicial  methods,  the  laws  declared  to  be  in  force  by  the  Emperor 
of  China.  What  the  content  of  this  authority  consists  of,  may 
easily  be  comprehended ;  it  includes  only  the  power  to  regulate,  for 
the  purpose  of  enforcing  territorial  laws  upon  their  own  subjects 
or  citizens  in  China,  questions  concerning  the  machinery  of  their 
courts,  the  law  of  procedure,  the  mode  of  trial,  the  rules  of  evidence, 
the  incidence  of  responsibility,  the  measure,  degree,  kind,  and 
manner  of  punishment,  and  other  kindred  matters.  The  sovereign 
power  of  legislation,  on  the  other  hand,  remains  in  the  Emperor 
of  China  unimpaired.  He  may  make  any  law  that  he  sees  fit  for 
the  purpose  of  maintaining  the  pubhc  peace  and  order,  of  preserv- 
ing the  decency  and  morals  of  the  people,  of  promoting  the  welfare 
of  his  country,  or  for  any  other  legitimate  purpose. 

"  U.  8.  For.  Rels.,  1880,  p.  239. 

"  The  Status  of  Aliens  in  China,  p.  217. 


46      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The   Law   of   Real    Estate    in   Extraterritorial   Courts. 

With  reference  to  matters  of  land  law  there  are  peculiar 
reasons  why  the  extraterritorial  courts  should  pay  defer- 
ence to  the  local  law,  for  it  is  a  fundamental  principle  of 
all  systems  of  jurisprudence  that  rights  of  realty  should 
be  determined  according  to  the  lex  situs.  The  considera- 
tions involved  in  this  matter  are  so  well  set  forth  in  an 
opinion  rendered  by  the  British  Supreme  Court  for  China 
that  they  will  be  here  quoted.^^  Justice  Bourne,  speaking 
for  the  Court,  said : 

I  hold  that  the  law  of  China  ought  to  be  apphed  to  the  facts 
of  this  case.  The  court  administers  the  law  of  England  (1863 
Order  in  Council,  Article  5),  but  what  is  the  law  of  England  in 
regard  to  immovable  property  situated  within  the  dominions  of  the 
Emperor  of  China?  Undoubtedly  that  rights  in  respect  of  such 
property  shall  be  governed  by  the  lex  sittts,  that  is,  by  the  law  of 
China. 

To  apply  the  law  of  English  realty  to  land  under  the  sovereignty 
of  China  is  to  disregard  the  distinction  between  the  real  and 
personal  statutes — a  fundamental  principle  of  Private  Interna- 
tional Law  which  can  be  traced  back  through  the  legal  history  of 
the  Western  world  to  the  time  of  the  Roman  Republic,  and  which 
is  as  necessary  today  as  ever.  It  is  true  that  our  extraterritorial 
rights  in  China  are  not  rooted  in  the  history  of  Western  law,  as 
are  those  in  the  Levant,  for  they  are  the  creatures  of  the  treaties 
with  China,  the  earliest  of  which  was  ratified  in  1842 ;  but  I  think 
there  is  no  doubt  that  the  Orders-in-Council,  from  which  the  court 
derives  its  jurisdiction  was  framed  on  the  long  established  hues 
of  an  extraterritorial  x)ersonal  law.  .  .  .  The  principle  that  land 
and  its  incidents  are  subject  to  the  lex  sitv^  is  not  arbitrary,  but 
founded  upon  cogent  considerations  of  justice  and  expediency — one 
of  the  most  obvious  of  which  is  that  contiguous  plots  of  land  should 

*'Macdonald  v.  Anderson,  Tientsin,  January  16,  1904.  The  opinion  is 
reproduced  in  Hinckley's  American  Consular  Jurisdiction  in  the  Orient, 
pp.  250-253. 


EXTRATEERITORIALITY  47 

be  subject  to  the  same  law  in  regard  to  such  incidents  as  prescrip- 
tion and  servitudes.  The  land  of  British  subjects  at  Tientsin  is 
often  coterminous  with  that  owned  by  Frenchmen,  Germans  and 
subjects  of  other  Treaty  Powers.  If  the  home  law  of  each  proprie- 
tor is  to  apply  to  his  land  at  Tientsin  there  will  be  different  periods 
of  limitation,  prescription  for  servitudes,  etc.,  according  to  the 
nationality  of  the  owner  for  the  time  being.  .  .  .  The  same  reason- 
ing excludes  the  law  of  the  owner's  domicile. 

Having  thus  declared  that  the  land  law  of  China  should 
be  applied,  Justice  Bourne  turned  to  a  consideration  of 
the  problem  of  determining  what  that  law  might  be. 
Eeferring  to  a  judgment  rendered  in  1901  by  the  Privy 
Council  in  the  case  of  Secretary  of  State  vs.  Charles- 
worth  Polling  &  Co.  (a  case  referring  to  extraterritorial 
jurisdiction  in  Zanzibar),  Justice  Bourne  said: 

That  case  seems  by  analogy  to  estabhsh  two  propositions,  that 
Chinese  law  ought  to  be  apphed  by  His  Majesty's  Courts  in  China 
to  the  incidents  of  land  in  China,  and  that  His  Majesty's  judges  in 
China  ought  to  take  judicial  notice  of  Chinese  law  [that  is,  without 
formal  proof  offered  in  court] .  In  regard  to  the  first,  the  greater 
part  of  Chinese  written  law  would  be  void  and  inoperative  in  an 
English  court  as  inconsistent  with  the  policy  of  Enghsh  law.  .  .  . 
Further,  Chinese  land  law  consists  almost  entirely  of  local  custom. 
A  great  deal  of  English  law  has  been  uniformly  followed  for  half  a 
century  by  his  Majesty's  subjects  in  China,  and  has  thus  acquired 
the  force  of  Chinese  law,  e.  g.,  testamentary  disposition  of  land  in 
China  according  to  the  Enghsh  form,  and  Enghsh  forms  of  con- 
veyancing. Where  there  is  no  custom,  the  duty  of  the  Chinese 
judge  is  to  decide  according  to  good  conscience.  The  British  Court 
would,  I  conceive,  in  such  cases  draw  on  the  civil  law  as  developed 
by  modem  continental  codes  and  text  writers,  including  our  own 
law  of  personal  property,  which  comes  in  some  respects  from  the 
same  source,  cf.  Maine's  Ancient  Law,  page  283.  If  a  land  law  so 
derived  is  thought  too  uncertain  to  support  the  large  commercial 
interests  now  centered  in  Shanghai  and  Tientsin,  legislation  alone 


48      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

can  supply  the  remedy.  Eights  of  limitation  and  servitudes  might 
be  governed  by  Land  Eegulation  approved  by  the  Treaty  Powers, 
and  succession  ah  intestato  by  Order-in-Council. 

In  regard  to  judicial  notice,  there  is  in  fact  no  Chinese  written 
civil  law.  Judicial  notice  might  be  taken  of  the  Penal  Code  of  the 
present  dynasty,  translated  by  Staunton,  London,  1810,  but  custom 
would  have  to  be  proved  by  evidence. 

Sources  of  Law  for  American  Courts  in  China.      If  we 

accept,  as,  in  the  main,  extraterritorial  courts  have 
accepted,  the  principles  stated  by  Mr.  Seward,  and 
quoted  above,  there  still  remains  the  difficulty,  in  the  case 
of  the  courts  of  each  of  the  Treaty  Powers,  of  determin- 
ing what  laws  of  the  country  concerned  have  been  made 
operative  outside  of  the  borders  of  the  countries  by 
whose  legislative  bodies  they  have  been  enacted.  As  to 
this  it  will  clearly  not  be  practicable  to  consider,  even 
generally,  the  practice  of  each  of  the  Treaty  Powers,  but 
it  will  be  advisable  to  examine  into  the  matter  from  the 
American  standpoint.^^ 

By  the  Act  of  August  11,  1848,^*  Congress,  after  vest- 
ing the  necessary  jurisdiction  in  American  consuls  to 
carry  into  full  effect  the  Treaty  of  1844,  went  on  to 
provide : 

That  such  jurisdiction  in  criminal  and  civil  matters  shall  in  all 
cases,  be  exercised  and  enforced  in  conformity  with  the  laws  of  the 
United  States,  which  are  hereby,  so  far  as  is  necessary  to  execute 
said  treaty,  extended  over  all  citizens  of  the  United  States  in  China 
(and  over  all  others  to  the  extent  that  the  terms  of  the  treaty  jus- 

•'In  this  examination  we  are  fortunate  in  having  the  assistance  of  a 
series  of  recent  articles  by  His  Honor  Judge  Charles  S.  Lobingier,  Judge  of 
the  United  States  Court  for  China.  Millard's  Review,  Oct.  26,  Nov.  9, 
Dec.  14  and  Dec.  28,  1918,  "  American  Courts  in  China." 

"  rX  Statutes  at  Large,  276,  Sec.  4. 


EXTRATEEEITOEIALITY  49 

tify  or  require)  so  far  as  such  laws  are  suitable  to  carry  said  treaty 
into  effect;  but  in  all  cases  where  such  laws  are  not  adapted  to  the 
object,  or  are  deficient  in  the  provisions  necessary  to  furnish  suit- 
able remedies,  the  common  law  shall  be  extended  in  like  manner 
over  such  citizens  and  others  in  China ;  and  if  defects  still  remain  to 
be  supplied,  and  neither  the  common  law  nor  the  statutes  of  the 
United  States  furnish  appropriate  and  suitable  remedies,  the  com- 
missioner shall,  by  decrees  and  regulations  which  shall  have  the 
force  of  law,  supply  such  defects  and  deficiencies.^* 

It  thus  appears  that  American  officials  exercising  ju- 
dicial power  in  China  are  obliged  to  look  to  a  number 
of  different  sources  for  the  law  which  they  are  to  apply. 
These  sources  may  be  enumerated  as  follows : 

1.  Acts  of  Congress. 

2.  The  Common  Law. 

3.  Special  Decrees  and  Regulations. 

4.  Chinese  Law. 

Those  familiar  with  federal  legislation  in  the  United 
States  will  know  that  there  is  in  the  Acts  of  Congress 
very  little  substantive  law  applicable  to  the  ordinary 
affairs  of  private  life,  and,  therefore,  if  we  except  such 
comprehensive  measures  as  the  so-called  Criminal  Code 
enacted  a  few  years  ago,  not  much  remains  for  the  guid- 
ance of  the  United  States  Court  for  China.*^ 

"  This  section  is  repeated  in  the  Act  of  1860,  and  carried  into  the  Revised 
Statutes,  Section  4086.  The  term  Commissioner  referred  to  the  repre- 
sentative of  the  United  States  in  China. 

^'In  some  cases  Congress  has  supplied  statute  law  for  special  courts  by 
enacting  that  certain  general  bodies  of  law  shall  be  applied.  For  example, 
in  1801  it  was  enacted  that  the  laws  of  the  State  of  Virginia  should  be 
considered  as  in  force  in  the  District  of  Colimibia;  and,  in  1884,  that  the 
laws  of  Oregon  should  apply  in  the  Territory  of  Alaska.  No  such  attempt 
has,  however,  been  made  to  supply  a  jurisprudence  for  the  United  States 
Court  and  the  consular  tribunals  in  CElna.    However,  the  United  States 

4 


50      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

As  regards  the  Common  Law  as  a  source  of  juris- 
prudence for  American  tribunals  in  China,  it  is  to  be 
observed  that  inasmuch  as  there  is  no  national  or  federal 
common  law  in  the  United  States,  and  the  bodies  of 
common  law  in  the  different  States  of  the  Union  are  by 
no  means  similar,  the  Common  Law  referred  to  in  the 
Acts  of  1848  and  1860  must  have  been  that  of  England 
as  it  existed  at  the  time  of  the  separation  of  the  American 
Colonies  from  the  mother  country.  This  was  the  opinion 
of  the  first  judge  of  the  United  States  Court  for  China, 
Judge  Wilfley,  and  this  view  has  since  been  followed  by 
the  Court.  The  jurisdiction  of  the  American  courts  in 
China  as  regards  *  *  equity  ' '  and  admiralty  has  not  been 
so  undetermined  as  in  the  case  of  the  common  law  proper, 
for  in  the  case  of  equity  these  courts  have  had  the  guid- 
ance of  the  body  of  equity  jurisprudence  which  the 
federal  courts  have  built  up  as  distinct  from  that  of  the 
individual  States,  and,  of  course,  American  admiralty 
jurisprudence  has  been  wholly  a  federal  product. 

Thirdly,  as  regards  Special  Decrees  and  Regulations 
as  a  source  of  law  for  American  tribunals  in  China,  the 
Act  of  1848  provided  that  the  Commissioner  from  the 
United  States  (provided  for  in  the  Treaty  of  1844)  and 
the  consuls  might  prescribe  the  forms  of  processes  and 
the  modes  of  executing  them,  the  manner  in  which  trials 
were  to  be  conducted,  the  fixing  of  fees,  giving  of  bail 
and  other  security,  etc. — such  rules  and  regulations  to  go 
into  immediate  effect  but  to  be  transmitted  to  the  Presi- 

Court  for  China  has  held  in  a  number  of  cases  that  statutes  enacted  by 
Congress  for  the  District  of  Columbia,  for  Alaska,  and  for  other  areas 
under  the  direct  and  exclusive  jurisdiction  of  Congress  might  be  availed 
of  in  China.  An  important  instance  of  this  holding  was  with  regard  to 
the  federal  statute  governing  the  chartering  of  corporations  in  Alaska. 


EXTRATEERITORIALITY  51 

dent  and  laid  before  Congress  for  possible  revision  or 
annulment. 

When,  later,  the  Commissioner  was  replaced  by  the 
American  Minister  to  China,  the  rule-making  authority 
was  transferred  to  him,  where  it  remained  until  1906, 
when  it  was  placed  in  the  United  States  Court,  the  provi- 
sion of  the  Act  of  1906  upon  this  point  reading  as  follows : 

The  procedure  of  the  said  Court  shall  be  in  accordance,  as  far  as 
practicable,  with  existing  procedure  prescribed  for  consular  courts 
in  China  in  accordance  with  the  Revised  Statutes  of  the  United 
States:  Provided,  however,  That  the  judge  of  the  said  United 
States  Court  for  China  shall  have  authority  from  time  to  time  to 
modify  and  supplement  said  rules  of  procedure. 

Judge  Lobingier,  concluding  his  article  in  Millard's 
Review,  to  which  reference  has  earlier  been  made,  says : 
**  Acting  under  this  authority  the  writer  has  already 
promulgated  Rules  for  Admission  to  Practice  in  all  of 
these  courts,^^  and  has  sent  out  for  comment  and  sugges- 
tion before  promulgation  a  draft  of  proposed  Eules  of 
Evidence  which  aim  to  cover  that  subject  in  brief  space. 
So  far  as  the  growing  business  of  the  Court  will  permit, 
it  is  the  writer's  intention  to  follow  these  with  successive 
drafts  of  rules  on  various  procedural  subjects  until  the 
whole  field  of  remedial  law  is  completed. ' ' 

Foreigners  as  Plaintiffs  in  Chinese  Tribunals — "Mixed 
Courts."  Thus  far  in  this  chapter  we  have  dealt  with 
the  jurisdiction  and  jurisprudence  of  foreign  or  extra- 
territorial courts  in  China.  We  have  now  to  consider  the 
practice  pursued  in  cases  where  Chinese  are  defendants 
and  which,  therefore,  are  tried  in  the  native  courts.  Here 

^  These  proposed  rules  were  published  in  Millard's  Review,  Vol.  iv,  p.  68. 


52      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  jurisdiction  of  the  Chinese  courts  is  complete  and 
exclusive,  but,  in  order  that  the  rights  of  foreign  plain- 
tiffs in  them  may  be  protected,  the  treaties  provide,  as 
we  have  seen,  that  an  *'  assessor  "  of  the  plaintiff's 
nationality  shall  have  the  right  to  be  present.^^  As  thus 
constituted  the  courts  have  come  to  be  known  as  *  *  Mixed 
Courts  " — a  somewhat  misleading  title,  for  they  are  not 
similar  to  the  *  *  mixed  courts  ' '  that  exist  in  the  Levant, 
the  assessor  having  no  right  to  participate  in  the  judg- 
ment or  to  dictate  to  the  Chinese  magistrate  what  his 
decision  shall  be.  He  is  there  merely  to  see  that  the 
elements  of  a  fair  trial  are  accorded  to  the  plaintiff.  If 
the  assessor  is  convinced  that  the  decision  rendered  con- 
stitutes a  flagrant  miscarriage  of  justice,  he  may  protest 
at  the  time,  and,  if,  notwithstanding  this  protest,  the 
decision  is  not  changed,  the  matter  may  be  referred  to 
the  plaintiff's  legation  at  Peking  for  it  to  take  such  action 
as  it  may  deem  best. 

In  an  interesting  article  contributed  to  the  Law  Quar- 
terly Review, ^^  entitled  '  *  The  Government  of  Foreigners 
in  China,"  the  author,  Mr.  Latter,  a  British  barrister 
at  law  of  Shanghai,  has  the  following  to  say  of  the  Mixed 
Courts  of  China : 

**  As  to  the  treaty  right  of  the  assessor  to  be  present,  the  following  pro- 
vision from  the  Sino-American  Treaty  of  November  17,  1880,  may  be 
quoted: 

"The  properly  authorized  ofBcial  of  the  plaintiflF's  nationality  shall  be 
freely  permitted  to  attend  the  trial  and  shall  be  treated  with  the  courtesy 
due  to  this  position.  He  shall  be  granted  all  proper  facilities  for  watching 
the  proceedings  in  the  interests  of  justice.  If  he  so  desires,  he  shall  have 
the  right  to  present,  to  examine,  and  to  cross-examine  witnesses.  If  he  is 
dissatisfied  with  the  proceedings,  he  shall  be  permitted  to  protest  against 
them  in  detail.  The  law  administered  will  be  the  law  of  the  nationality 
of  the  oflScer  trying  the  case."    Customs  Treaties,  i,  p.  738. 

•Vol.  XIX  (1903),  pp.  316-325. 


EXTRATERRITOKIALITY  53 

Here  we  no  longer  have  an  extraterritorial  court  or  the  limita- 
tions or  defects  of  extraterritoriality.  The  Chinese  magistrate  has 
complete  jurisdiction  over  all  persons  in  his  district  who  are  not 
exempted  therefrom  by  treaty,  and  a  Nicaraguan  is  as  much  under 
his  jurisdiction  as  a  Chinaman.  The  defects  of  the  Mixed  Court 
(viewed  on  its  civil  side)  are  limited  to  a  complete  absence  of  any 
system  of  law  and  a  tribunal  competent  to  administer  justice. 
Chinese  law  has  not  yet  distinguished  between  civil  and  criminal 
cases.  What  we  should  regard  as  purely  civil  cases,  such  as  mer- 
cantile disputes,  when  they  occur  among  the  Chinese  themselves, 
rarely  come  into  court:  they  adjust  themselves  either  by  reason  of 
the  extreme  spirit  of  compromise  inherent  in  the  Chinese  character, 
or  by  the  appearance  of  the  'peace  maker'  beloved  of  Chinese 
society,  or  by  the  intervention  of  the  guild  of  that  particular  trade. 
Should  they  come  into  court,  the  unsuccessful  party  is  usually  pun- 
ished in  some  way  or  another,  for  the  magistrate  is  administering 
good  morals  to  his  people,  and  one  party  will  usually  in  some  way 
have  offended  against  his  conception  of  them.  Chinese  law  is,  in 
short,  aimed  entirely  at  a  maintenance  of  general  good  principles 
among  the  people,  and  its  science  consists  in  a  diversity  of  pun- 
ishments for  offenses  against  them.  In  other  words,  it  does  not 
deal  with  the  rights  of  persons  among  themselves  so  much  as  with 
a  general  conception  of  their  duties  to  the  State  at  large  and  the 
penalties  for  the  infraction  of  such  duties ;  that  is  to  say,  in  West- 
em  language,  it  is  purely  penal.  The  value  of  such  a  system  of 
law  in  settling  the  disputes  of  the  purely  commercial  communities 
of  the  treaty  ports  is  difficult  to  discover. 

The  result  of  this  is  that  in  the  Mixed  Court  there  is  no  system 
or  code  of  law  whatsoever.  A  case  is  decided  according  to  a  gen- 
eral idea  of  what  the  court  considers  fair.  The  court  is  not  bound 
by  precedent;  it  has  no  fixed  procedure;  it  may  decide  one  thing 
one  day  and  another  the  next.  It  sometimes  refers  cases  to  the 
arbitration  of  another  merchant  in  the  trade,  in  order  that  he  may 
decide  it  according  to  the  custom  of  the  port.  But  the  privacy  of 
such  arbitration  prevents  such  customs  from  crystalizing,  and  it  is 
a  fair  generalization  to  say  that  in  any  case  when  a  Chinaman  is 
defendant  the  result  is  purely  hypothetical,  and  depends  on  the 


54      FOEEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

relative  strength  of  the  Chinese  magistrate  and  foreign  assessor 
concerned. 

The  evils  of  the  consular  jurisdiction  of  the  Western  powers  are 
fully  felt  in  the  Mixed  Court.  The  magistrate  is  a  Chinese  official 
of  a  humble  grade ;  even  if  he  were  of  a  higher  rank  his  knowledge 
of  commercial  disputes  would  not  be  of  much  value.  The  assessor 
is  a  junior  of  his  consular  service ;  he  is  not  a  member  of  the  legal 
profession ;  he  can  never  be  a  practiced  lawyer,  and  is  chosen  for  his 
knowledge  of  Chinese  rather  than  for  any  legal  or  judicial  qualifi- 
cations. His  duty  as  a  consul  is  to  protect  the  interests  of  his 
nationals,  and  the  Chinese  magistrate  is  fully  aware  of  it.  Too 
often  do  the  proceedings  in  this  court  develop  into  a  mere  wrangle 
between  the  assessor  and  magistrate,  each  advocating  the  cause  of 
his  own  sovereign's  subject.  Sometimes  the  court  adjourns  in'high 
disagreement.  At  other  times,  weary  of  its  civil  strife,  it  tosses 
the  ball  back  to  the  litigants  and  bids  them  see  to  it  themselves. 
The  writer  has  personal  knowledge  of  an  instance  of  this  latter 
sort,  when  the  decision  of  the  court  was  as  follows:  "This  case 
involves  many  difficult  points,  and  the  parties  must  settle  the 
matter  among  themselves  and  not  cause  any  further  litigation." 

Mr.  Latter,  the  author  we  have  been  quoting,  goes  on 
to  show  also  that  the  present  system  of  consular  juris- 
diction in  China  is  detrimental  to  the  consular  services 
themselves,  for,  as  the  facts  actually  are,  the  consuls  are 
obliged  to  spend  much  of  the  time  which  they  owe  to 
their  respective  governments,  in  the  adjudication  of  cases 
in  which  their  own  nationals  have  no  real  substantial 
interest.  This  arises  by  reason  of  the  fact  that  the 
Chinese,  in  order  to  avoid  local  assessments  and 
**  squeezes  "  put  their  property  and  businesses  in  the 
names  of  foreigners  (for  a  consideration).  It  is  Mr. 
Latter 's  estimate  that  fully  one-half  of  the  lands  standing 
in  the  names  of  foreigners  in  Shanghai  are  beneficially 
owned  by  Chinese,  and  that  one-half  of  the  civil  suits 
brought  in  the  Mixed  Court  sitting  in  that  city  likewise 


EXTRATEEEITORIALITY  55 

involve  no  real  interests  of  foreigners.  And  yet,  in  these 
cases,  the  consuls  of  the  nominal  plaintiffs  have  to  be 
present  and  exert  their  influence. 

Shanghai  International  Mixed  Court.  Because  of  its 
importance  and  because  of  some  special  features 
exhibited  by  it,  it  will  be  advisable  to  give  a  special 
description  of  the  Mixed  Court  at  Shanghai.  In  a  later 
chapter  an  account  will  be  given  of  the  so-called  Interna- 
tional and  French  ' '  Settlements  ' '  at  Shanghai,  and  it  is 
only  necessary  to  say  that  the  Mixed  Court  referred  to 
here  is  that  which  the  Chinese  have  established  with 
jurisdiction  within  the  International  Settlement,  that  is, 
which  is  concerned  with  cases  in  which  the  plaintiffs  are 
nationals  of  any  of  the  Treaty  Powers. 

In  ports  other  than  Shanghai  the  courts  for  the  trial 
of  '*  mixed  "  cases  sit  at  irregular  times  whenever  cases 
arise  requiring  adjudication.  At  Shanghai,  however,  the 
international  mixed  court  has  regular  days  for  sitting, 
and  the  consular  representatives  of  the  Treaty  Powers 
take  regular  turn  in  being  present  as  assessors.  Thus 
if  an  Englishman  or  an  American  or  the  national  of  any 
of  the  other  Treaty  Powers  (except  France)  is  plaintiff 
in  a  suit,  his  case  comes  up  before  the  court  upon  the  day 
when  the  representative  of  his  country  will  be  present 
as  assessor. 

A  further  feature  which  distinguishes  the  Mixed  Court 
in  Shanghai  from  the  other  mixed  courts  in  China  is  the 
fact  that  it  asserts  a  certain  amount  of  jurisdiction  over 
cases  in  which  both  or  all  of  the  parties  are  Chinese. 
Perhaps  upon  this  point  we  cannot  do  better  than  to 
quote  from  Morse.^^    He  says : 

**  Trade  and  Administration  of  China,  pp.  200  flF. 


56      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

In  criminal  cases  in  which,  by  Chinese  law,  the  death  penalty  is 
or  might  be  inflicted — such  as  homicide,  rebellion,  counterfeiting, 
rape,  etc. — ^the  proceedings  take  the  form  of  a  demand  for  extra- 
dition, and,  upon  a  primki  facie  case  being  made  out,  the  defendant 
is  remitted  to  the  custody  and  judgment  of  the  Shanghai  city 
magistrate  (Hsien)  who,  though  of  nominally  lower  rank  than  the 
president  of  the  mixed  court,  is  yet  an  imperial  r^resentative, 
qualified  to  administer  the  criminal  law  of  China.  In  criminal 
cases  of  lesser  magnitude  the  judgment  is  rendered  by  the  president 
of  the  court,  but  subject  to  the  approval  of  the  foreign  assessor 
sitting  with  him.  This  course  is  followed  also  in  police  cases  for 
contravention  of  municipal  regulations,  but  it  is  not  required  that 
these  regulations  should  have  the  prior  approval  of  the  Chinese 
authorities,  and  as  occidental  and  oriental  ideas  are  not  always  in 
harmony  in  such  matters  as  sanitation,  nuisances,  control  of  traffic, 
incidence  of  license  fees,  etc.,  there  is  here  an  opening  for  a  judicial 
review  of  alien  legislation  which  is  not  always  lost,  and  it  happens 
occasionally  that  the  opinions  of  the  judge  and  the  assessor  do  not 
agree. 

Civil  cases  in  China  are  commonly  settled  by  gild  action  and  are 
seldom  brought  before  the  official  tribunals,  but  the  relative  uni- 
formity of  justice  secured  by  foreign  supervision  has  caused  a 
greater  resort  to  the  Shanghai  mixed  court.  When  the  plaintiff  is 
a  foreigner,  the  ordinary  course  is  followed  and  the  approval  of  the 
assessor  is  held  necessary  to  the  judgment  of  the  court.  Not  infre- 
quently it  happens  that  a  case  with  plaintiff  and  defendant  both 
Chinese  bcomes  a  mixed  case  by  the  interjection  of  a  foreigner  into 
the  plaintiff's  claim.  The  Chinese  authorities  have  always  tried  to 
distinguish  these  pseudoclaims,  but  it  is  generally  held  that  on  them 
lies  the  onus  of  proof  of  noninterest — not  any  easy  thing  to  prove. 
These  cases  then  generally  follow  the  usual  course,  unless  it  can  be 
definitely  proved  that  the  foreign  interest  was  introduced  at  the 
eleventh  Jiour  in  order  to  divert  the  course  of  justice. 

Suits  which  are  admittedly  between  Chinese  on  both  sides  are  a 
bone  of  contention.  One  side  maintains  that,  being  purely  Chinese, 
they  are  no  concern  of  the  foreign  powers  and  are  therefore  not 
subject  to  the  decision  of  the  foreign  assessor;  the  other  side  holds 


EXTEATERRITORIALITY  57 

that  every  judicial  question  arising  within  the  "  area  reserved  for 
foreign  residence  and  trade  "  concerns  the  foreign  powers,  and  that 
the  foreign  assessor  of  the  day  is  bound  to  exercise  an  oversight. 
On  hoth  sides,  it  is  felt,  but  not  generally  admitted,  that  there  is 
some  reason  in  the  contention  of  the  other,  and  the  assessor  is  gen- 
erally passive  unless  there  are  evidences  of  extortion  and  flagrant 
injustice,  while  the  magistrate  generally  puts  himself  into  agree- 
ment with  the  assessor  when  a  municipal  regulation  comes  into  the 
case,  neither  being  too  desirous  of  crystallising  the  differences  and 
precipitating  a  conflict.  Occasionally,  however,  when  the  incom- 
patibility of  view  can  not  be  compromised  a  sharply  defined  issue 
is  made. 

The  Chinese  official  view  is  unimpeachable ;  appeal  is  made  to  the 
letter  of  the  treaty  stipulations  granting  to  foreign  powers  the  right 
of  oversight  in  cases  in  which  a  foreign  interest  is  involved,  and  only 
in  those  cases.  The  foreign  official  view  is  equally  unimpeachable. 
When  in  the  years  1853-1864  the  Taiping  rebels  devastated  the 
country  for  himdreds  of  miles  around  Shanghai  many  thousands  of 
refugees  found  there  under  the  foreign  flags  the  protection  to  life 
denied  them  under  their  own  flag.  In  the  ten  years  which  elapsed 
before  the  restoration  of  order  these  thousands  were  sheltered  within 
the  area  reserved  for  foreign  residence,  from  which  it  would  have 
been  inhuman  barbarity  to  expel  them;  and  while  there  police  and 
sanitary  measures  were  necessarily  adopted  to  protect  the  foreign 
residents  from  them  and  them  from  each  other.  The  impetus  thus 
given,  Chinese  continued  to  flock  to  the  foreign  settlement  of  Shang- 
hai, within  the  limits  of  which  there  are  today  over  half  a  million. 
There  has  thus  grown  up  a  foreign  interest  in  real  estate  valued  at 
over  two  hundred  million  taels,  and  a  foreign  interest  in  the  main- 
tenance of  order  and  the  administration  of  justice  among  the  half 
million  Chinese  living  under  the  same  jurisdiction  as  the  foreign 
residents;  and  the  foreign  official  view  is  that  foreign  supervision 
is  necessary  over  foreign  and  Chinese  residents  alike  in  the  inter- 
est of  foreigners;  and,  further,  that  two  independent  police  and 
justiciary  administrations  cannot  be  allowed  to  function  within 
the  same  area  and  that  if  there  is  to  be  one  administration  it  shall 
be  the  foreign. 


58      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

In  1869  formal  rules  were  published  by  the  British 
Consul  at  Shanghai,  acting  under  instructions  from  his 
Minister  at  Peking,  governing  the  procedure  to  be  fol- 
lowed by  British  parties  and  assessors  in  causes  before 
the  mixed  court.^^ 

It  has  been  estimated  that  more  cases  are  tried  in  this 
court  every  year  than  are  tried  in  possibly  any  other 
court  in  the  world.  The  importance  of  this  tribunal  is 
further  enhanced  by  the  fact  that  its  jurisdiction  is 
practically  without  limit  as  to  questions  of  life,  liberty 
and  property,  and  that  no  provision  is  made  for  appeals 
from  its  decisions.    In  order  to  get  its  work  done  it 

^  Regarding  these  so-called  Yangkingpang  Regulations  Mr.  Sidney  Bar- 
ton, of  the  British  Legation  at  Peking,  in  a  recent  article  entitled  "  The 
Shanghai  Mixed  Court,"  published  in  The  Chinese  Social  and  Political 
Science  Review,  March,  1919,  has  the  following  to  say: 

"  The  Regulations  of  1869  were  curious  in  many  ways.  They  did  not 
originate  with  the  foreign  authorities;  the  original  proposal  was  made  by 
the  Chinese  authorities  and  after  various  amendments  was  eventually 
agreed  upon  by  the  foreign  and  Chinese  officials  provisionally  for  one  year. 
What  was  originally  intended — as  is  shown  by  correspondence  which 
passed  at  the  time — was  the  creation  of  a  Chinese  district  for  the  foreign 
area  at  Shanghai  which  would  enable  the  appointment  of  a  Chinese  magis- 
trate with  a  seal  and  therefore  with  certain  defined  powers  under  the 
Chinese  administrative  system  as  it  existed  then.  It  was  also  pointed  out 
at  the  time  that  it  was  essential  that  the  magistrate  appointed  should 
have  a  proper  staff  and  also  a  proper  salary.  Unfortunately,  the  arrange- 
ment which  was  eventually  adopted  did  not  provide  for  any  of  these  points. 
Presumably  it  was  found  impossible  under  the  then  administrative  system 
to  create  a  new  district,  and  consequently  no  substantive  official  as  the 
head  of  that  district  with  the  powers  which  a  Chinese  official  of  that  rank 
would  have  held  was  ever  appointed.  A  deputy  was  appointed  by  the 
Viceroy  of  the  Province,  which  was  explained  as  being  equal  to  the  appoint- 
ment by  the  Emperor.  He  was  given  a  wooden  chop  and  it  was  explained 
that  that  might  be  considered  as  the  same  thing  as  a  seal." 

This  fact  that  the  Chinese  magistrates  presiding  in  the  Mixed  Court 
have  been  of  a  lower  rank  than  the  magistrate  of  the  city,  not  to  speak 
of  some  of  the  suitors  before  them,  has  seriously  interfered  with  the  effi- 
ciency of  the  court. 


EXTEATEERITORIALITY  59 

usually  sits  daily  in  four  divisions,  each  with  a  Chinese 
magistrate  and  a  foreign  assessor. 

It  has  been  suggested  by  Judge  Lobingier,  of  the  United 
States  Court  for  China,  that  an  appellate  tribunal  might 
be  established  by  drawing  in  turn  judges  from  the  United 
States  and  British  courts  who  should  sit  with  a  Chinese 
judge  of  recognized  ability  selected  by  his  Government 
with  the  approval  of  the  Legations  at  Peking;  and  that, 
to  this  court  might  also  be  entrusted  the  duty  of  exercis- 
ing a  general  administrative  supervision  over  the  Mixed 
Court.*^  The  objection  to  Judge  Lobingier 's  plan  is  that 
it  would  not  tend  to  enhance  the  dignity  and  standing  of 
the  courts  of  first  instance — something  which  is  very 
much  needed — and,  furthermore,  that  it  would  carry  with 
it  increased  interference  in  the  exercise  by  the  Chinese 
of  their  jurisdiction — also  a  result  to  be  deprecated. 

Status  of  the  Shanghai  Mixed  Court  Since  1911.  Since 
1911  the  Mixed  Court  at  Shanghai  has  had  an  exceptional 
status  due  to  the  fact  that,  with  the  outbreak  of  the  Revo- 
lution in  1911,  and  the  loss,  for  the  time  being,  of  control 
by  the  central  authorities  at  Peking  over  the  local  Chin- 
ese authorities  at  Shanghai,  the  representatives  of  the 
Treaty  Powers  deemed  it  necessary  to  take  the  court 
under  their  complete  control  in  order  that  it  might  con- 
tinue to  function  and  meet  the  judicial  needs  of  the  city 
which,  as  a  practical  proposition,  had  to  be  met. 

Under  the  imperial  regime,  as  has  been  already  pointed 
out,  the  magistrates  of  the  Mixed  Court  had  been  ap- 

*•  See  Judge  Lobingier's  article  "  The  International  Mixed  Court  of 
Shanghai,"  in  The  American  Bar  Association  Journal,  April,  1919  (Vol.  v, 
p.  188).  This  article  also  gives  an  interesting,  though  brief,  account  of 
the  origin  of  the  Mixed  Court. 


60      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

pointed  by  the  local  Chinese  authority,  the  Shanghai 
Taotai,  and  their  official  salaries  paid  out  of  the  Taotai's 
funds.  Though  nominally  independent  officials,  the  mag- 
istrates had  necessarily  acted  as  subordinates  of  the 
Taotai  by  whom  they  were  appointed  and  paid,  and 
their  decisions,  in  a  very  considerable  degree,  had  re- 
flected the  policies  of  the  Taotai.  The  arrest  of  persons 
violating  the  criminal  laws  of  the  Empire  or  the  ordin- 
ances of  the  City  or  international  Settlement  had,  how- 
ever, been  in  the  hands  of  the  police  of  the  Shanghai 
Municipal  Council,  and,  pending  trial  or  after  conviction, 
the  prisoners  had  been  confined  in  the  Municipal  Jail. 
But,  to  repeat,  the  Mixed  Court  itself  was  a  purely 
Chinese  institution.^*^ 

After  Shanghai,  in  the  closing  months  of  1911,  had 
declared  its  independence  of  the  Manchu  rule  at  Peking, 
the  Taotai,  being  unable  to  function  in  the  "  Native 
City,"  asked  permission  of  the  foreign  consuls  to  exer- 
cise his  duties  of  office  within  the  International  Settle- 
ment. This  request,  upon  being  referred  to  the  Diplo- 
matic Corps  at  Peking,  was  refused,  and  the  Consular 
Body  directed  to  exercise  such  powers  of  control  as 
might  be  necessary  to  protect  foreign  life  and  property 
and  to  maintain  the  status  of  the  International  Settle- 
ment. 

Thereupon  the  Consular  Body  issued  a  public  proclam- 
ation, dated  November  10,  1911,  which  read  as  follows: 

Whereas  a  vast  number  of  Chinese  reside  and  carry  on  business 
in  the  International  Settlement,  and  for  cases,  whether  criminal  or 
civil,  a  Mixed  Court  exists;  and  whereas  there  is  at  present  no 

*^The  court  administered  the  Women's  Prison  and  the  House  of  Deten- 
tion which  latter  served  as  a  Debtors'  Prison. 


EXTEATEEKITORIALITY  61 

authority  recognized  by  the  Powers  in  the  control  of  affairs  in 
Shanghai  city  and  district ;  and  whereas  it  is  essential  for  the  peace 
and  good  order  of  the  said  Settlement  that  the  said  Mixed  Court 
with  the  prisons  thereto  attached  should  continue  to  carry  on  their 
functions,  the  consuls  of  the  Treaty  Powers  hereby  notify  all  resi- 
dents in  the  said  Settlement,  foreign  and  native  alike,  that  by 
virtue  of  their  position  and  authority  they  have  as  a  measure  of 
expediency  confirmed  Messrs.  Kuan  Chung,  Wang  Chia  Hsi,  and 
Yeh  Tsung  Yi  in  the  offices  they  already  hold  as  the  Chinese 
Magistrates  of  the  said  Court  to  act  under  the  guidance  of  and  in 
concert  with  the  Assessors  of  the  said  Consuls  as  heretofore,  and 
have  authorized  the  Municipal  Council  of  the  said  Settlement  to 
direct  the  Municipal  Police  to  take  over  the  prisons  of  the  said 
Court  and  to  execute  its  summons  and  warrants  when  bearing  the 
seal  of  the  Senior  Consul,  and  its  decrees  and  orders  when  counter- 
signed by  the  proper  Assessor,  and  to  maintain  and  uphold  the 
lawful  authority  of  the  said  Court  in  every  way.  Wherefore,  know 
ye,  aU  classes  and  conditions,  that  the  present  uncertain  state  of 
affairs  in  the  Shanghai  district  does  in  no  way  affect  the  enjoyment 
of  all  law-abiding  residents  in  the  said  Settlement  of  their  former 
rights,  privileges  and  immunities,  and  that  anyone  attempting  by 
force  or  threat  or  other  form  of  compulsion  to  interfere  with  any 
such  resident  in  the  pursuit  of  his  lawful  business  or  to  induce  any 
such  resident  to  join  any  political  party  or  society  or  to  subscribe 
to  the  fimds  thereof  will  on  detection  be  arrested  and  punished  as 
a  lawbreaker  without  any  leniency. 

There  was,  of  course,  no  legal  or  other  treaty  right 
empowering  this  action  upon  the  part  of  the  Treaty 
Powers,  but  the  necessities  of  the  situation  compelled,  at 
the  time,  this  or  some  similar  action.  It  is,  however,  sig- 
nificant that  the  foreign  control  assumed  over  the  Mixed 
Court  was  not  surrendered  after  the  Republic  was  created 
and  recognized  by  the  Powers,  and  its  authority  over 
Shanghai  again  established,  nor,  in  fact,  at  the  time  of 
the  present  writing  (1920)  has  the  control  of  the  Court 


62      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

been  returned  to  Chinese  hands.  Regarded  from  a  strictly 
legal  point  of  view,  it  is  impossible  to  justify  this  refusal 
of  the  Powers  to  yield  to  the  several  times  expressed 
request  of  the  Peking  government  that  Chinese  control 
should  be  re-established.  Regarded,  however,  from  the 
viewpoint  of  practical  administrative  efl&ciency,  the 
Powers  have  felt  themselves  justified  in  retaining  their 
control  until  the  Chinese  Government  shall  be  willing  to 
agree  to  certain  reforms  which  the  Powers  deem  essential 
to  the  efficient  working  of  the  Court. 

In  June,  1914,  the  Doyen  of  the  Diplomatic  Body  at 
Peking  notified  the  Chinese  Foreign  Office  that  the  Mixed 
Court  would  be  returned  to  Chinese  control  if  the  fol- 
lowing propositions  were  agreed  to. 

1.  The  Chinese  Magistrates  to  be  appointed  by  the 
Chinese  Government,  but  subject  to  the  approval  of  the 
Shanghai  Consular  Body. 

2.  At  the  trial  of  purely  Chinese  civil  cases,  a  foreign 
Assessor  to  be  allowed  to  be  present  as  a  representative 
of  the  Consular  Body.*^ 

3.  In  all  criminal  cases,  sentences  involving  more  than 
five  years'  imprisonment  to  be  carried  out  by  the  Court 
itself.*®    The  Court  to  have  the  power  to  impose  capital 

*  Under  the  old  regime,  when  this  civil  jurisdiction  was  wholly  in 
Chinese  hands,  justice  had  often  been  denied  by  the  refusal  of  the  Court 
to  pay  heed  to  petitioners.  It  had,  indeed,  been  the  practice  of  the  court 
never  to  opeai  a  case  on  the  first  petition,  but  to  keep  down  the  business 
of  the  court  by  proceeding  to  trial  only  after  it  was  no  longer  practicable 
to  refuse  hearings  to  wealthy  or  especially  insistent  litigants.  After  1911, 
with  the  introduction  of  a  foreign  Registrar  and  the  establishinent  of  a 
fixed  schedule  of  fees  for  filing  petitions,  and  with  the  appearance  before 
the  court  of  foreign  lawyers,  and  the  sending  of  foreign  Assessors  to  watch 
the  proceedings,  the  civil  business  of  the  court  had  greatly  increased. 

*  The  Rules  of  1869  had  provided  that  "  in  cases  where  Chinese  subjects 
are   charged  with  grave   oflfences   punishable  by  death   and  the   various 


EXTRATEEKITORIALITY  63 

punishment,  the  execution  to  take  place  inside  the  Set- 
tlement and  supervised  by  Chinese  authorities,  but  the 
Magistrates  and  foreign  Assessors  to  hold  joint  coroner 
inquests. 

4.  All  prisons  and  detention  houses  under  the  control 
of  the  Court  to  be  administered  by  the  Shanghai  Munici- 
pal Police.^^ 

5.  Summonses,  warrants,  and  other  writs  of  the  Court 
to  be  served  and  executed  by  the  Municipal  Police,^^ 

6.  Appeals  from  the  Court  to  the  Shanghai  Taoyin 
and  the  consuls  in  mixed  cases  to  be  continued.  In  case 
of  disagreement  between  the  Taoyin  and  the  Consul,  the 
decision  of  the  Court  to  be  affirmed. 

7.  The  administrative  and  financial  affairs  of  the 
Court  to  be  in  the  hands  of  a  foreign  **  Inspector." 

There  has  been  much  correspondence  between  the 
Diplomatic  Corps  and  the  Chinese  Foreign  Office  regard- 
ing these  proposals  and  some  of  them  the  Foreign  Office 

degrees  of  banishment,  it  will  still  be  for  the  District  Magistrate  to  take 
action."  And  by  an  agreement  made  in  1906  between  the  Diplomatic 
Corps  and  the  Chinese  Foreign  OflSce,  prisoners  deserving  more  than  five 
years  imprisonment  had  been  transferred  from  the  jurisdiction  of  the 
Mixed  Court  to  that  of  the  Shanghai  District  Magistrate.  This  practice 
had  proved  very  unsatisfactory.  Persons  guilty  of  heinous  crimes,  it  was 
found,  often  escaped  with  no  more  than  a  nominal  punishment,  or  their 
punishment  greatly  delayed.  Accordingly,  on  December  1,  1911,  the  Mixed 
Court  Magistrate  was  informed  by  the  Senior  Consul  that  the  five-year 
limit  was  suspended  and  that  the  Court  was  authorized  to  pass  sentences 
without  limit,  and  at  its  discretion,  but  that  no  action  upon  capital  sen- 
tences would  be  taken  until  a  report  had  been  made  to  the  Consular 
Body  and  its  approval  formally  given. 

"*  The  conditions  of  these  prisons  and  detention  houses  while  under  Chi- 
nese administration  had  been  very  bad  indeed. 

^  There  had  been  much  corruption,  ineflSciency,  and  favoritism  vmder  the 
old  regime  when  these  court  orders  were  executed  by  Chinese  "  runners  " 
and  other  Chinese  officials. 


64      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

has  declared  its  willingness  to  accept ;  but  no  agreement 
has  thus  far  been  reached.  ^^^ 

Mixed   Court  in   the  French  Settlement  at  Shanghai. 

In  addition  to  the  Mixed  Court  which  has  been  described 
and  which  sits  in  and  for  the  International  Settlement  at 
Shanghai,  there  is  also  a  Mixed  Court  which  functions  in 
the  French  Settlement.  This  court  has  only  one  ''As- 
sessor "  who  is  always  a  French  consular  official.  The 
present  rules  distinguishing  the  jurisdiction  of  this  court 
from  that  of  the  Mixed  Court  of  the  International  Set- 
tlement were  promulgated  in  1902.^^  In  civil  cases  be- 
tween Chinese  the  suit  is  brought  in  the  Mixed  Court  of 
the  Settlement  in  which  the  defendant  resides ;  in  crim- 
inal cases  in  which  foreigners  are  not  involved,  and  in  all 
police  cases  against  Chinese  living  in  the  Settlements  the 
action  is  brought  in  the  Mixed  Court  of  the  Settlement 
in  which  the  offense  was  committed ;  if  the  plaintiff  is  a 
foreigner,  but  not  of  French  nationality,  and  the  defend- 
ant a  Chinese  living  in  the  International  Settlement,  the 
suit  is  brought  in  the  Mixed  Court  of  that  settlement ;  if 
the  plaintiff  is  a  Frenchman  and  the  defendant  a  Chinese 
living  in  the  French  Settlement,  the  Mixed  Court  of  that 
Settlement  has  jurisdiction ;  if  the  plaintiff  is  a  foreigner 
of  other  than  French  nationality,  and  the  defendant  a 
Chinese  resident  in  the  French  Settlement,  jurisdiction 
is  in  the  Mixed  Court  of  the  International  Settlement; 

"  For  an  account  of  these  negotiations  and  a  statement  of  the  Chinese 
point  of  view,  see  the  able  article  by  Mr.  HoUington  K.  Tong,  "  The  Shang- 
hai Mixed  Court  and  the  Settlement  Extension "  in  Millard's  Review, 
November  15,  1919. 

•*  These  rules  were  adopted  by  the  Consular  Body  at  Shanghai,  approved 
by  the  Shanghai  Taotai  and  approved  by  the  Diplomatic  Body  at  Peking. 
For  their  text,  see  MacMurray,  p.  1902/5. 


EXTEATEERITORIALITY  65 

if  the  plaintiff  is  a  Frenchman  and  the  defendant  a 
Chinese  resident  of  the  International  Settlement,  the  suit 
is  heard  by  the  Mixed  Court  of  the  French  Settlement ; 
in  criminal  cases  in  which  a  foreigner  not  of  French 
nationality  appears  as  complainant,  the  Mixed  Court  of 
the  International  Settlement  has  jurisdiction,  but,  if  a 
Frenchman  is  the  complainant,  the  case  comes  before  the 
Mixed  Court  of  the  French  Settlement. 

Arrests  by  Chinese  Officials.  As  has  been  earlier 
pointed  out,  foreigners  throughout  China  are  subject  to 
arrest  by  Chinese  officials,  but  must,  after  arrest,  be  taken 
at  once  for  trial  before  their  respective  Consuls.  In  the 
foreign  Concessions  or  Settlements  at  the  various  treaty 
ports,  the  Powers  maintain  their  own  constabularies  for 
preventing  crime  and  apprehending  offenders.  As  re- 
gards, then,  the  arrest  of  nationals  of  the  Treaty  Powers 
there  has  not  been  any  considerable  dispute  concerning 
the  rights  and  immunities  involved.  Controversies,  at 
times  very  acute,  have,  however  arisen  with  reference  to 
the  right  of  Chinese  officials  to  arrest  Chinese  employed 
by  nationals  of  the  Treaty  Powers. 

In  general  it  has  been  held  that  Chinese  officers  may 
not  go  upon  premises  occupied  by  Treaty  Power  na- 
tionals, in  order  to  make  arrests,  or  seize  goods  or 
papers,  without  first  obtaining  the  approval  of  the  con- 
sular official  of  the  Power  concerned.  By  treaty  provi- 
sions, the  Chinese  Government  has  agreed  not  to  inter- 
fere with  the  employment  of  Chinese  by  foreigners. 
Based  upon  this  engagement,  the  general  practice  upon 
the  part  of  the  Powers  has  been  to  insist  that  when  the 
Chinese  employee  of  a  Treaty  Power  national  is  arrested, 
immediate  notice  should  be  given  to  his  employer.  How- 
5 


66      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ever,  the  American  Govenmient  appears  to  have  asserted 
a  principle  broader  than  this,  and,  in  a  case  arising  in 
1914  and  involving  a  Chinese  named  C.  C.  Li,  to  have 
declared  that  an  employee  of  an  American  firm  should 
not  be  arrested  at  all,  on  or  off  the  American  premises, 
without  first  giving  notice  to  the  American  employer  or 
his  Consul. 

In  this  case  the  American  Minister  had  held  that  it 
was  sufficient,  in  case  of  an  arrest  of  a  Chinese  employee 
outside  the  premises  of  his  American  employer,  if  notice 
were  immediately  given  that  the  arrest  had  been  made, 
and  opportunity  given  the  employer,  upon  the  trial,  to 
show  his  interest  in  the  matter.  This  holding  was,  how- 
ever, overruled  by  the  authorities  at  Washington  who 
held  that  the  arrest  should  not  have  been  made  at  aU,  that 
is,  without  previous  notice.  In  support  of  this  holding, 
reference  was  made  to  a  case,  occurring  in  1899,  in  Chin- 
Mang,^*  the  essential  facts  of  which  were  as  follows: 
The  Chinese  Chief  of  Police  sent  to  the  office  of  a  Mr. 
Emery,  an  American,  without  any  request  of  or  reference 
to  the  American  Consul,  and  arrested  a  Chinese  in  Mr. 
Emery's  employ.  Mr.  Emery,  when  he  learned  this,  sent 
another  one  of  his  Chinese  employees  to  the  police  yamen 
with  his  card  to  demand  the  man's  release  and  to  tell  the 
official  that  when  he  wanted  to  arrest  his  employees  he 
must  apply  to  the  American  consul.  For  thus  coming 
into  his  presence  upon  such  an  errand,  this  second  em- 
ployee was  seized  and  so  severely  beaten  that  his  life 
was  endangered,  the  official  himself  taking  a  hand  in  the 
beating.  The  local  American  Consul  at  once  demanded 
that  the  two  employees  be  released  and  the  official  con- 

•*  TJ.  8.  For.  Rela.,  1900,  pp.  394  et  acq. 


EXTEATEREITOEIALITY  67 

cemed  severely  punished,  which  demands  the  American 
Government  later  held  had  been  properly  made.  Candor 
compels  one  to  say,  however,  that  this  Chinkiang  case 
hardly  constituted  a  precedent  to  support  the  American 
contention  in  the  Li  case.  Li  was  arrested  outside  for- 
eign premises  ^^ ;  the  first  employee  arrested  in  the  Chin- 
kiang case  had  been  apprehended  upon  American  prem- 
ises and  punished  without  even  notifying  the  American 
Consul  and  requesting  him  to  have  the  employee  turned 
over  to  the  Chinese  officials.  And,  of  course,  there  was 
no  ethical  justification  whatever,  for  the  punishment  of 
the  second  employee  who  had  been  sent  to  the  police 
yamen. 

With  regard  to  the  arrest  in  foreign  "  Settlements  " 
of  resident  Chinese,  whether  employed  by  foreigners  or 
not,  the  practice  is  that  the  Chinese  authorities  are 
required  to  have  the  warrants  countersigned  by  the 
Senior  Consul  and  the  actual  arrests  made  by  the  foreign 
police.  Also,  the  accused  is  given  the  right  to  a  prelim- 
inary hearing  before  a  mixed  court  before  being  re- 
moved from  the  precincts  of  the  Settlements. 

Reform  of  the  System  of  Mixed  Courts.  There  has 
been  a  great  deal  of  diplomatic  correspondence  between 
the  Chinese  and  Treaty  Power  Governments  in  the 
attempt  upon  the  part  of  the  latter  to  obtain  for  the 
mixed  courts  not  only  a  more  definite  jurisdiction,  but  a 
better  standing  and  composition  so  that  they  may  oper- 
ate more  efficiently.  As  yet,  however,  it  has  been  found 
impossible  to  get  the  Chinese  to  designate  adequately 
trained  men  as  judges.    The  fault  has  not,  however,  been 

"  Li  was  arrested  upon  the  charge  that  he  had  stolen  or  become  possessed 
of  a  stolen  blank  check  of  an  American  firm,  and,  upon  it,  forged  the  name 
of  an  American  missionary. 


68      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

all  on  one  side,  for  the  foreign  assessors  have  themselves 
been  by  no  means  possessed  of  a  legal  knowledge  and 
experience  snch  as  is  demanded  for  an  intelligent  over- 
sight over  the  important  interests  coming  before  them.''^ 
The  basic  difficulty,  however,  has  been  the  very  unsat- 
isfactory condition  of  the  Chinese  law  and  its  adminis- 
tration. In  the  Convention  of  1876  we  find  the  following 
characterization  of  the  Chinese  system  of  administering 
justice : 

There  can  be  no  doubt  that  the  Chinese  judicial  establishment, 
as  it  affects  foreigners,  is  unsatisfactory.  No  code  of  procedure 
worthy  to  be  called  such  exists.  The  magistrates,  secretaries,  and 
constables  are  often  corrupt.  Judgments  are  secured  only  after  a 
great  deal  of  exertion,  and  persistent  efforts  have  to  be  made  to 
secure  their  execution.  Serious  annoyances  arise  from  the  fact  that 
it  is  often  difficult  to  discover  the  officer  who  has  jurisdiction  in 
given  cases,  and  to  whom  the  consular  officer  should  apply  to  secure 
a  hearing  for  his  countrymen,  and  again  because,  so  far  as  for- 
eigners are  concerned,  no  Chinese  appellate  courts  exist.  For  the 
latter  reason  questions  which  should  be  decided  by  appeal  can  only 
be  treated  by  political  recourse  through  the  diplomatic  agents,  and 
become  the  subject  of  long  and  annoying  negotiations. 

**  To  this  statement  should  be  added,"  said  Minister 
Seward,  in  the  memorandum  to  which  previous  reference 
has  been  made,'^'^  *'  the  further  fact  that  in  matters  of 
complaint,  both  criminal  and  civil,  but  particularly  in  the 
latter,  the  Chinese  officials  frequently  place  difficulties  in 
the  way  of  the  appearance  of  the  prosecutor,  and  that  no 
adequate  records  are  kept  so  that  attempts  to  secure 
revision  of  their  action  is  attended  with  unnecessary 
difficulties.    It  happens,  moreover,  that  the  consular  offi- 

••  See  U.  /Sf.  For.  Rels.,  1906,  Pt.  i,  pp.  372-407. 
"  U.  8.  For.  Rels.,  1880,  p.  155. 


EXTEATEERITORIALITY  69 

cer  is  refused  the  position  and  authority  at  the  trial  to 
which  he  is  entitled  by  treaty,  or,  if  not  by  treaty,  by  the 
necessities  of  the  case  as  growing  out  of  the  peculiarities 
of  the  Chinese  system. '  * 

During  recent  years  the  codifying  of  Chinese  law,  civil 
and  criminal,  substantive  and  procedural,  has  been  en- 
tered upon.  There  is  in  qualified  force  a  brief  criminal 
code  but  as  yet  this  is  as  far  as  the  reform  has  extended. 
And  as  regards  the  courts  themselves,  it  cannot  be  said 
that  they  have  been  greatly  improved  since  the  time  when 
Minister  Seward  wrote.  Indeed,  so  far  as  the  control  by 
the  Central  Government  of  China  of  the  courts  in  the 
Provinces  is  concerned,  the  situation  is  not  as  satisfactory 
under  the  Eepublic  as  it  was  under  the  Empire.  This 
lack  of  control  was  illustrated  while  the  writer  was  in 
China.  The  Governor  of  the  Province  of  CheMang,  as  an 
exercise  of  his  own  personal  judgment  abolished  certain 
courts  of  justice  which  the  Peking  Government  had  estab- 
lished. Upon  being  criticized  for  so  doing,  he  replied 
that  the  act  had  already  been  done  and  could  not  be  cor- 
rected. He  was  then  admonished  in  the  future  to  let  the 
Central  Government  know  his  intentions  when  he  had  in 
contemplation  acts  of  the  kind  complained  of.  The  Gov- 
ernor thereupon  wrote  his  superiors  at  Peking  that  he 
did  not  wish  to  hear  anything  more  about  the  matter 
since  it  was  his  opinion  that  the  Central  Government 
should  never  have  established  the  courts  in  question. 

The  difficulties  that  have  arisen  in  the  administration 
of  harbor  rules  and  regulations  of  the  maritime  customs 
owing  to  the  lack  of  power  upon  the  part  of  Chinese 
judicial  officials  to  impose  upon  foreigners  penalties  for 
the  violations  of  these  rules  and  regulations  will  be 


70      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

spoken  of  in  the  chapter  dealing  with  the  Chinese  Mari- 
time Customs  Service. 

Disadvantages  of  the  Extraterritorial  System  to  the 
Chinese.  The  disadvantages  to  both  Chinese  and  for- 
eigners of  the  system  of  extraterritoriality  which  has 
been  described  in  the  preceding  pages  stand  out  so  plainly 
that  no  extended  analysis  is  needed  to  reveal  them.  They 
may  be  enumerated  as  follows: 

To  the  Chinese  the  system  is  objectionable,  in  the  first 
place,  because  it  is,  in  substance,  if  not  nominally,  in 
derogation  of  their  territorial  sovereignty,  and  therefore 
a  national  humiliation  to  them. 

In  the  second  place,  it  means  that  not  only  in  civil 
matters  but  with  regard  to  the  punishment  of  persons 
who  have  violated  their  laws  or  committed  acts  of  vio- 
lence against  their  persons,  they  are  obliged  to  have 
resort  to  tribunals  and  to  laws  which  are  foreign  to  them, 
and  which  in  many  cases  do  not,  in  the  penalties  which 
they  supply,  satisfy  their  sense  of  justice  and  expediency 
and  their  ideas  of  vicarious  responsibility.  Indeed,  in 
many  cases,  the  injured  persons  have  no  means  of  know- 
ing whether  any  penalties  at  all  are  actually  imposed  and 
carried  out.  In  very  many  cases,  also,  the  nearest  for- 
eign official  before  whom  they  have  to  take  the  case  is 
hundreds  of  miles  distant  from  the  place  where  the  cause 
of  action  has  accrued ;  and  this,  in  a  country  largely  with- 
out railways  and  almost  wholly  without  highways,  is  a 
very  serious  matter.  It  necessarily  often  means  that  the 
witnesses  and  other  evidence  cannot  possibly  be  produced 
at  the  trials. 

Thirdly,  even  in  those  cases  in  which  the  jurisdiction 


EXTEATEEEITOEIALITY  71 

is  in  their  own  courts,  the  Chinese  have  to  submit  to  the 
presence  of  foreign  assessors  who  not  infrequently,  but 
perhaps  usually  on  good  ethical  grounds,  interfere  with 
the  functioning  of  these  courts. 

In  the  fourth  place,  the  extraterritorial  system  is  espe- 
cially objectionable  to  the  Chinese,  and  a  hindrance  to 
their  attempts  to  maintain  law  and  order  within  their 
own  borders,  when  its  privileges  are  claimed  by,  and  have 
to  be  conceded  to,  the  Chinese  who  have  come  into  China 
from  Formosa  or  from  Korea  into  Manchuria  and  assert 
their  technical  Japanese  citizenship.  The  same  is  true 
with  regard  to  Chinese  bom  in  the  Philippines  or  in 
continental  United  States,  and  emigrating  to  China.  Also 
the  same  is  true  of  the  Chinese  from  French  Indo-China 
crossing  the  border  into  Yunnan.  These  Chinese  are  of 
course  not  different  from  the  other  Chinese;  in  many 
cases  they  go  far  into  the  interior  and  live  and  do  busi- 
ness exactly  like  their  neighbors,  and  yet  are  able  to 
claim  Japanese  or  American  or  French  citizenship  and 
therefore,  when  defendants,  immunity  from  the  jurisdic- 
tion of  Chinese  tribunals.  And,  it  does  not  need  to  be 
added  that  abundant  opportunity  is  thus  offered  to 
Japan  or  the  United  States,  or  to  France,  if  it  sees  fit  to 
bring  claims  against  the  Chinese  Government  upon  the 
ground  that  their  respective  nationals  have  not  been 
properly  protected  or  treated  by  the  local  authorities. 

In  the  fifth  place,  it  has  been  found  impossible  to  avoid 
the  abuse  of  the  extraterritorial  system  which  consists  in 
nationals  of  the  Treaty  Powers  lending  their  names,  and 
therefore  the  protection  of  their  consuls,  to  purely  Chin- 
ese concerns.  That  is,  as  a  matter  of  friendship,  or  more 
often  in  return  for  moneys  paid,  the  Chinese  business  or 


72      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

property  obtains  a  foreign  status  when,  in  fact,  no  sub- 
stantial foreign  interest  or  control  exists. 

Finally  one  cannot  shut  his  eyes  to  the  fact  that  there 
is  usually  a  strong  bias  in  favor  of  his  own  nationals 
upon  the  part  of  the  consul  or  other  foreign  official  who 
tries  the  cases  in  which  the  Chinese  are  plaintiffs  or 
petitioners.  As  a  comparatively  recent  writer  has  truly 
said: 

The  first  duty  of  a  consul  is  to  protect  the  interests  of  his  sover- 
eign's subjects ;  it  is  scarcely  consistent  to  add  to  that  duty  the  task 
of  administering  justice  when  a  complaint  is  brought  against  that 
subject;  and  the  duties  of  protection  of  a  class  and  the  adminis- 
tration of  impartial  justice  between  that  class  and  others  cannot 
but  clash.  Only  too  often  is  the  verdict  of  the  extraterriorial  court 
a  formula  as  of  course  "  judgment  for  the  defendant,"  and  the 
defendant  has  then  every  reason  to  be  satisfied  that  he  has  an 
eflBcient  consular  service."* 

Disadvantages  of  the  Extraterritorial  System  to  For- 
eigners in  China.  To  foreigners  in  China  the  extrater- 
ritorial system  presents  the  following  disadvantages. 

In  the  first  place,  so  long  as  it  is  maintained  it  remains 
practically  impossible  for  the  Chinese  government  to 
open  up  the  entire  country  to  trade,  manufacturing,  and 
residence  by  the  foreigner.  It  has  been  found  barely 
feasible  to  permit  missionaries  to  settle  outside  the  treaty 
ports,  and,  in  connection  with  their  work,  to  engage  in 

"• "  The  Government  of  Foreigners  in  China,"  Law  Quarterly  Review, 
vol.  XIX  (1903),  316.  For  a  further  discussion  of  the  disadvantages  and 
evils  inherent  in  the  extraterritorial  system,  see  the  elaborate  memoran- 
dum of  Sir  Robert  Hart,  entitled  "  Inspector  General's  Proposals  for  the 
Better  Regulation  of  International  Relations,"  submitted  in  1876.  This 
memorandum  is  given  entire  as  Appendix  D  to  Morse's  International 
Relations  of  the  Chinese  Empire,  Vol.  u. 


EXTRATERRITORIALITY  73 

industry  or  trade  to  a  very  small  extent,  but  with  regard 
to  all  others  it  is  but  natural  that  the  Chinese  should  be 
unwilling  to  permit  them  to  establish  residences  and  trad- 
ing or  manufacturing  plants  away  from  the  Treaty  Ports 
as  long  as  they  are  so  largely  exempted  from  the  opera- 
tion of  the  local  laws  and  the  jurisdiction  of  the  local 
courts.  This,  then,  is  one  of  the  heavy  prices  which  the 
foreigner  pays  in  return  for  the  extraterritoriality  which 
he  enjoys  in  China. 

In  the  second  place,  the  extraterritorial  system  means 
a  multiplicity  of  courts.  Each  nation  is  obliged  to  main- 
tain tribunals  for  its  own  nationals  at  all  of  the  Treaty 
Ports. 

In  the  third  place,  the  courts  are  presided  over  by 
officials  who  are  not,  for  the  most  part,  trained  in  the  law. 
This  disadvantage  is,  of  course,  not  absolutely  inherent 
in  the  system,  but,  as  a  practical  proposition,  it  is  neces- 
sary to  vest  jurisdiction  in  the  consuls,  of  whom  it  is  not 
feasible  to  require  that  they  should,  before  appointment, 
have  become  trained  in  the  law  and  the  science  of  its 
administration.  Great  Britain,  by  the  establishment  of 
the  Supreme  Court  for  China,  and  the  United  States,  by 
the  establishment  of  the  United  States  Court  for  China, 
have  partially  corrected  this  evil,  but  only  partially,  for, 
after  all,  these  tribunals  are  able  to  try  only  a  compara- 
tively small  portion  of  the  many  cases  adjudicated  in 
China  in  which  British  and  American  citizens  are  de- 
fendants. 

Again,  as  we  have  seen,  there  is  great  difficulty  under 
the  extraterritorial  system  in  determining  what  law  shall 
be  applied  by  the  foreign  courts.  Finally,  also,  is  the 
very  serious  disadvantage  flowing  from  the  fact  that 


74      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

extraterritorial  courts  necessarily  have  only  a  personal 
jurisdiction,  that  is,  over  the  persons  of  the  defendants. 
This  defect  is  dwelt  upon  by  Mr.  Latter,  from  whose 
illuminating  article  we  have  earlier  had  occasion  to  quote. 
He  says :  ''^ 

In  its  administration  of  justice  the  system  fails  from  two  causes : 
first,  from  the  fact  that  justice  is  administered  by  consular,  not 
judicial  officers;  secondly,  from  the  inherent  limitations  of  the 
extraterritorial  court  having  merely  personal  jurisdiction.  The 
British  Court  in  China,  for  instance,  has  power  only  over  British 
subjects  in  China.  It  is  the  sole  tribunal  in  which  cases  against  a 
British  subject  in  China  can  be  tried,  but  it  must  be  noticed  its 
powers  are  Umited  to  and  extend  only  over  that  British  subject. 
If,  therefore,  a  Chinaman  sues  a  British  subject,  the  court  has  no 
control  over  that  Chinaman.  If  he  perjures  himself  the  court 
cannot  punish  him,  or  again,  it  cannot  commit  him  for  contempt 
of  court.  The  Chinaman  can  only  be  prosecuted  or  punished  in  a 
Chinese  court  and  according  to  Chinese  law,  and  it  has  been  re- 
marked that  perjury  is  to  a  Chinaman  an  offense  as  venial  as 
punning  to  an  Englishman.  The  only  means  that  foreign  courts 
have  of  obtaining  control  over  a  Chinese  plaintiff  is  to  require  him 
to  make  a  deposit  of  money  as  security  for  costs.  .  .  .  From  the 
same  want  of  control  over  a  plaintiff  of  another  nationahty  arises 
another  grave  flaw  in  the  extraterritorial  system.  If  the  defendant 
has  no  defence  against  the  plaintiff  but  has  a  counterclaim  of  equal 
or  greater  amount,  the  court  cannot  entertain  the  coimterclaim, 
however  obvious  the  vaHdity  of  the  counterclaim  may  be.  The 
counterclaim  is  a  claim  against  a  man  of  another  nationahty, 
and  can  be  heard  only  in  the  court  of  that  nationahty,  and  tried 
according  to  the  law  of  that  nationahty.  .  .  .  Another  great 
weakness  of  the  system,  also  arising  from  the  fact  that  the 
jurisdiction  of  the  foreign  courts  is  entirely  personal,  appears 
in  aU  questions  relating  to  land.  .  .  .  Does  the  fact  that  a  British 
subject  owns  land  in  China  vest  that  land  with  all  the  character- 

•• "  The  Gfovermnent  of  Foreigners  in  China,"  Law  Quarterly  Review, 
Vol.  XIX    (1903),  316. 


EXTEATEERITOEIALITY  75 

istics  of  land  in  England?  It  has  been  tacitly  assumed  that  it 
does,  and  lawyers  employ  the  English  form  of  conveyance  in  trans- 
ferring land-  But  the  assumption  is  contrary  to  the  theory  of 
English  law,  which  is  that  the  law  which  governs  land  is  the  lex 
loci  rei  sitae,  that  is,  in  this  case,  the  law  of  China,  and  is  com- 
pletely at  variance  with  a  recent  decision  of  the  Privy  Council  on 
an  appeal  from  the  court  of  Zanzibar  where  a  similar  system  of 
extraterritoriality  prevails.  .  .  .  The  fact  is  that  the  lawyers  in 
Shanghai  and  other  treaty  ports  in  China  do  not  really  know  what 
the  law  applicable  to  land  held  by  British  subjects  and  other 
foreigners  really  is.®° 

Possible    Abolition    of    Extraterritoriality    in    China. 

With  disadvantages  and  evils  such,  as  have  been  enumer- 
ated, it  is  not  surprising  that  the  Chinese  should  be 
anxious  to  have  the  extraterritorial  system  abolished 
from  their  country,  or  that  this  desire  should  have  met 
with  a  certain  amount  of  support  from  foreigners  as  well. 
In  the  so-called  Mackay  Treaty  of  1902  with  Great 
Britain,  Article  XII  reads  as  follows : 

China  having  expressed  a  strong  desire  to  reform  her  judicial 
system,  and  to  bring  it  into  accord  with  that  of  Western  nations. 
Great  Britain  agrees  to  give  every  assistance  to  such  reform,  and 
she  will  also  be  prepared  to  relinquish  her  extraterritorial  rights 
when  she  is  satisfied  that  the  state  of  the  Chinese  laws,  the  arrange- 
ment for  their  administration,  and  other  conditions  warrant  her 
in  so  doing. 

This  provision  also  appears  in  almost  identical  terms 
in  the  Treaties  of  1903,  of  Japan  and  of  the  United 
States,  and  in  that  of  1908  of  Sweden  with  China,  but 
nothing  has  resulted  from  it  because,  in  fact,  China  has 
made  little  progress  in  the  reform  of  her  laws  and  judi- 
cial system,  and  under  any  circumstances  it  will  not  be 

••  It  is,  however,  to  be  noted  that  though  the  British  form  is  used,  all 
land  transfers  are  recorded  in  the  proper  Chinese  land  ofSces. 


76      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

practicable  to  abolish  extraterritoriality  until  the  consent 
of  all  the  Treaty  Powers  has  been  obtained. 

Argument  of  Chinese  Delegation  at  Paris.  Included 
among  the  matters  urged  by  the  Chinese  Delegation  at 
the  Paris  Conference  for  fixing  the  terms  of  the  treaty  of 
peace  with  Germany,  was  one  relating  to  the  abolition  in 
China  of  the  extraterritorial  judicial  powers  exercised  by 
foreign  consuls.  The  arguments  advanced  by  the  Delega- 
tion in  support  of  this  proposition  may  be  summarized  as 
follows : 

Several  of  the  friendly  Powers  have  already  formally 
recognized  that  this  reform  is  desirable,  and  have 
explicitly  promised  that  they  will  agree  that  this  may  be 
effected  as  soon  as  China  herself  can  make  the  necessary 
reforms  in  her  own  system  of  courts  and  in  the  laws 
which  they  are  to  enforce.  "While  it  is  not  claimed  that 
China  has  brought  her  laws  and  judicial  organization  to 
a  state  of  perfection  equal  to  that  of  the  most  advanced 
nations,  yet  she  has  made  such  progress  as  to  warrant 
her  in  being  permitted  to  rid  herself  of  the  extraterri- 
torial rights  now  possessed  by  foreigners  within  her 
borders.  Among  other  improvements  effected  the  follow- 
ing were  enumerated : 

(1)  China  has  adopted  a  constitution  providing  for  a 
separation  of  governmental  powers,  assuring  to  the 
people  their  inviolable  fundamental  rights  of  life,  liberty 
and  property,  and  guaranteeing  the  complete  indepen- 
dence and  protection  of  judicial  officers  and  freedom 
from  executive  and  legislative  interference  in  the  execu- 
tion of  their  official  duties;  (2)  China  has  prepared  five 
codes  (criminal,  civil,  commercial,  civil  procedure,  and 
criminal  procedure),  some  of  them  being  already  in  pro- 


EXTKATEERITOEIALITY  77 

visional  force;  (3)  three  grades  of  new  courts  have  been 
established  (district,  court  of  appeal,  and  a  Supreme 
Court  at  Peking) ,  and  by  their  sides  a  system  of  procura- 
torates;  (4)  civil  and  criminal  causes  have  been  sepa- 
rated, publicity  of  trials  provided  for,  rules  of  evidence 
reformed,  corporal  punishments  to  coerce  confessions 
abolished,  and  rules  provided  for  the  creation  of  a  legal 
profession,  entrance  to  which  is  made  dependent  upon 
the  passing  of  regular  examinations;  (5)  the  judicial 
officers  of  all  courts,  high  and  low,  are  required  to  have 
legal  training,  and,  in  many  cases,  they  have  studied  at 
foreign  universities;  (6)  the  prison  and  police  systems 
have  been  improved. 

The  defects  in  the  present  extraterritorial  system 
emphasized  by  the  Delegation  were  the  following:  (1) 
What  constitutes  an  offense  or  a  legal  cause  of  action  as 
determined  in  the  consular  courts  of  one  of  the  Powers 
is  often  not  so  held  in  the  courts  of  the  other  Powers: 
thus  inequality  of  rights  and  legal  confusion  results;  (2) 
There  is  a  lack  of  effective  control  over  witnesses  or 
plaintiffs  of  a  nationality  other  than  that  of  the  court. 
**  Where  the  testimony  of  a  foreign  witness  of  a  nation- 
ality different  from  that  of  the  defendant  is  required,  the 
court  is  dependent  upon  his  voluntary  action,  and  if, 
after  he  has  voluntarily  appeared,  he  should  decline  to 
answer  questions,  he  could  not  be  fined  or  committed  for 
contempt  of  court,  nor  could  he  be  punished  by  that  court 
if  he  should  commit  perjury.  So  also  a  foreign  plaintiff 
cannot  be  punished  by  that  court  for  perjury  or  contempt 
of  court.  .  .  .®^    If  the  defendant  has  no  defense  against 

"An  American  lawyer  was  recently  suspended  from  practice  by  the 
United  States  Court  for  China  because  of  unprofessional  conduct  in  a  case 
before  a  British  court. 


78      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

the  plaintiff  but  has  a  counter-claim,  the  court  cannot 
entertain  the  counter-claim,  however  obvious  the  validity 
of  that  counter-claim  may  be  ";  (3)  There  is  difficulty  in 
obtaining  evidence  when  the  crime  is  committed  far  in 
the  interior ;  (4)  There  is  a  conflict  between  the  consular 
and  judicial  functions  of  the  person  holding  the  courts. 
**  When  a  complaint  is  brought  against  his  nationals,  the 
duty  of  protection  of  a  class  and  the  administration  of 
justice  between  that  class  and  others  cannot  but  clash. '  * 

Upon  these  grounds  the  Chinese  Delegation  at  Paris 
asked  that  the  Powers  should  agree  to  the  abolition  of 
the  entire  system  of  extraterritoriality  as  soon  as  China 
should  put  into  force  the  five  codes  that  have  been  men- 
tioned, and  complete  the  establishment  of  new  courts  in 
all  the  districts  where  foreigners  reside.  This  she  would 
be  able  to  do  by  the  end  of  the  year  1924,  the  Delegation 
asserted. 

The  Delegation  furthermore  asked  that  the  Powers 
agree  that  the  following  changes  in  the  present  system 
be  immediately  made : 

**(a)  That  every  mixed  case,  civil  or  criminal,  where 
the  defendant  or  acused  is  a  Chinese,  be  tried  and 
adjudicated  by  Chinese  courts  without  the  presence  or 
interference  of  any  consular  officer  or  representative  in 
the  procedure  or  judgment." 

"  (6)  That  the  warrants  issued  or  judgments  deliv- 
ered by  Chinese  courts  may  be  executed  within  the  con- 
cessions or  within  the  precincts  of  any  building  belonging 
to  a  foreigner,  without  preliminary  examination  by  any 
consular  or  foreign  judicial  officer." 

With  regard  to  the  foregoing  argument  of  the  Chinese 
Delegation  the  general  observation  may  be  made  that  in 


EXTEATEEKITORIALITY  79 

China,  to  a  peculiar  extent,  there  is  a  difference  between 
the  regulations  and  orders  that  are  formulated  by  the 
Government  and  the  results  that  are  actually  attained 
under  them.  Thus  a  false  impression  is  produced  if  the 
statements  are  accepted  at  their  full  face  value  that  at 
present  Chinese  judges  are  required  to  be  learned  in  the 
law,  that  they  are  exempt  from  executive  or  legislative 
interference  in  the  execution  of  their  duties  of  office,  and 
that  the  national  constitution,  now  in  force,  secures  to 
individuals  adequate  protection  in  matters  of  lif€  and 
property.  If  the  writer  at  this  point  may  inject  a  per- 
sonal opinion  it  would  be  that  though  the  abolition  of  the 
extraterritorial  system  is  a  highly  desirable  end  from  the 
standpoint  of  the  foreigner  as  well  as  from  that  of  the 
Chinese,  it  would  not  be  well  to  attempt  to  do  this  until 
it  is  made  certain,  as  a  matter  of  actual  fact,  and  not  as 
one  of  paper  regulation  or  declared  intention,  that  there 
exists  in  China  a  fairly  complete  body  of  ascertainable 
law  administered  by  a  system  of  courts  which  by  reason 
of  the  learning,  experience,  probity  and  freedom  from 
political  or  executive  interference  of  their  presiding 
judges  commands  the  confidence  of  the  Western  Powers. 
It  is  the  author's  opinion  that  it  is  doubtful  whether, 
without  foreign  aid,  the  Chinese  will  be  able  to  create  a 
judicial  organization  that  will  actually  function  so  as  to 
satisfy  Western  requirements.  To  his  mind  the  most 
promising  mode  by  which  the  Chinese  could  be  aided  in 
bringing  about  a  situation  under  which  it  would  be 
expedient  to  abolish  extraterritoriality  would  be  for  the 
Powers  to  permit  the  Chinese,  as  a  first  step,  to  establish 
courts  for  the  trial  of  cases  in  which  foreigners  are 
parties  either  as  defendants  or  plaintiffs,  that  would  be 


80      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

truly  '  *  mixed  ' '  in  character ;  that  is,  tribunals  presided 
over  by  two  or  more  judges  of  whom  one  at  least  should 
be  a  foreigner  learned  in  the  law  and  experienced  in  its 
administration.  These  courts  would  be  Chinese  courts, 
and  the  judges  Chinese  ofl&cials,  the  judges  who  are  for- 
eigners, however,  to  be  appointed  upon  the  nomination 
of,  or  at  least  with  the  approval  of,  the  foreign  offices  of 
the  Treaty  Powers.  In  those  oases  in  which  the  judg- 
ments rendered  are  not  approved  by  the  foreign  judge,  a 
right  of  appeal  should  lie  to  a  superior  court  and  the 
cases  heard  before  a  panel  of  judges  of  whom  a  majority 
should  be  of  foreign  nationality.  If  it  should  be  found 
that  the  Chinese  authorities  and  the  Chinese  judges  were 
disposed  to  give  whole-hearted  co-operation  in  this 
scheme,  and  satisfactory  results  were  obtained,  the 
participation  of  the  foreign  judges  might  be  gradually 
lessened,  until  the  Chinese  judicial  system  would  become 
fully  freed  from  all  extraterritorial  elements.  In  other 
words,  China  might  be  started  upon  the  road  along  which 
the  Kingdom  of  Siam  has  already  made  such  consider- 
able progress. 

Japanese  "Police  Boxes"  in  China.  In  connection 
with  the  extraterritorial  privileges  enjoyed  by  them  in 
China,  the  Japanese  have  claimed  a  right  which  has  not 
been  put  forward  by  any  of  the  other  Powers  and  which 
has  been  strenuously  objected  to  by  the  Chinese,  though 
they  have  not  succeeded  in  preventing  its  actual  exercise 
in  Fukien,  in  Manchuria  and  in  some  other  parts  of  their 
country.  This  right,  which  the  Japanese  have  claimed 
and  exercised,  has  been  to  maintain  police  officials  and 
police    stations    and    jails    or    houses    of    detention   in 


EXTEATEEEITOEIALITY  81 

connection  with  their  consulates.  This  right  they  have 
attempted  to  found  upon  the  treaty  provisions  which 
grant  to  them  the  rights  of  residence  and  trade  in  the 
Treaty  Ports,  and  since  1915,  throughout  Manchuria. 

In  1916  the  establishment  of  these  ** police  boxes,"  as 
they  are  termed,  in  the  city  of  Amoy  was  protested 
against  by  the  Provincial  Assembly  of  the  Province  of 
Fukien,  which  sent  to  the  national  Parliament  at  Peking 
a  memorial  from  which  the  following  may  be  quoted  as 
descriptive  not  only  of  what  had  been  done  but  of  the 
grounds  upon  which  the  Japanese  had  attempted  to 
justify  their  action: 

On  account  of  the  geographical  contiguity  of  Amoy  to  Formosa 
and  the  Peng-hu  Islands,  a  large  number  of  Japanese  naturahsed 
subjects  have  settled  in  Amoy.  Countenanced  by  the  Japanese, 
these  aliens  have  often  disturbed  the  peace  and  created  disorder  in 
various  forms.  Under  the  aegis  of  the  Japanese  consulate,  such 
law-breakers  have  been  immune  from  the  interference  of  the  Chin- 
ese poKce  authorities  who  are  quite  powerless  to  deal  with  them. 
Seeing  an  opportunity  for  them  to  advance  further  in  their  aggres- 
sion, the  Japanese,  under  the  pretext  of  controlhng  their  nationals, 
settled  in  that  part,  rented  a  house  at  Chien-tao-kow  in  Amoy  in 
the  tenth  month  of  last  year.  Over  the  door  of  the  House  a  notifi- 
cation was  posted  in  which  words  to  the  following  effect  were 
written :  "  The  sub-Pohce  Station  of  the  Consulate  of  Great  Japan 
at  Amoy."  Later  on  the  notification  was  replaced  by  a  wooden 
signboard  with  the  same  words  painted  on.  Within  the  sub-Pohce 
station  was  a  house  of  detention.  At  the  same  time  police  barracks 
were  erected  at  Ssu  Tsi  Shih.  Upon  protest  of  the  Commissioner 
for  Foreign  Affairs  at  the  port  the  Japanese  Consul  stated  in  reply 
that  the  said  sub-poUce  station  was  merely  an  extension  of  the 
Japanese  Consulate.  In  defending  his  position,  he  further  cited 
the  provision  of  article  3  of  the  Chino-Japanese  Commercial  Treaty 
and  distorted  the  principle  of  the  provision  in  such  a  manner  as 
to  construe  that  in  every  Japanese  consulate  there  should  be  a 
6 


82      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

police  station  attached  to  it  in  order  to  enable  the  Japanese  con- 
sular authorities  to  exercise  control  over  Japanese  nationals.  After 
repeated  protests  lodged  with  the  Japanese  consulate  by  the  Com- 
missioner of  Foreign  Affairs  under  the  order  of  the  Acting  Gov- 
ernor of  Fukien,  the  Japanese  finally  removed  the  signboard  from 
the  door  and  hung  the  same  inside  the  house.  But  notwithstanding 
this,  the  Japanese  are  still  exercising  police  Jurisdiction  there. 
Since  the  eleventh  month  of  last  year,  the  Japanese  have  illegally 
arrested  many  naturalised  Japanese  subjects  and  Chinese  subjects 
in  scores  of  different  cases.  The  attitude  of  the  Japanese  Consul 
towards  the  protests  of  the  Foreign  Commissioner  has  been  un- 
yielding. The  only  subterfuge  the  Japanese  consul  relies  upon  in 
answer  to  the  protests  of  the  Chinese  authorities  is  the  misinter- 
pretation of  the  provisions  of  the  treaties. 

It  does  not  appear  that  Japan  in  her  treaties  with 
China  has  in  so  many  words,  or  even  by  reasonable  impli- 
cation, obtained  any  police  rights  in  the  Province  of 
FuMen  or  in  the  city  of  Amoy.  She  has  only  those  extra- 
territorial and  other  consular  rights  which  the  other 
Treaty  Powers  have. 

The  matter  of  Japanese  police  boxes  in  Manchuria  and 
Eastern  Inner  Mongolia  has  been  a  more  serious  matter 
to  the  Chinese  than  it  has  even  in  FuMen.  In  these  re- 
gions, as  will  be  later  more  particularly  discussed,  Japan 
was  able  in  1915,  as  one  of  the  results  of  her  Twenty-one 
Demands,  to  obtain  special  privileges.  In  these  demands 
Japan  at  first  asked  that  her  nationals  should  be  free  to 
travel,  reside  and  engage  in  all  kinds  of  business  and 
manufacture  throughout  South  Manchuria  and  Eastern 
Inner  Mongolia,  and  (in  Group  V)  that  police  depart- 
ments in  important  places  in  China  should  be  jointly 
administered  by  Japanese  and  Chinese  or  that  the  police 
departments  of  those  places  should  employ  numerous 
Japanese.  Japan  did  not  succeed  in  obtaining  all  of  these 


EXTEATERRITOEIALITY  83 

demands,  but,  as  to  South  Manchuria,  secured  for  her 
nationals  freedom  of  trade,  business,  travel  and  resi- 
dence. It  was,  however,  expressly  provided  that  the 
Japanese  availing  themselves  of  these  rights  should  be 
required  to  register  with  the  local  authorities,  and  that 
they  should  submit  themselves  ''  to  the  police  laws  and 
ordinances  and  taxation  of  China."  Civil  and  criminal 
cases  in  which  the  defendants  might  be  Japanese  were 
to  be  tried  in  Japanese  consular  courts,  and  those  in 
which  Chinese  were  defendants,  in  the  Chinese  courts. 
Civil  cases  relating  to  land  between  Chinese  and  Japa- 
nese were  to  be  adjudicated  by  delegates  of  both  coun- 
tries acting  conjointly  but  in  accordance  with  Chinese 
law  and  local  usage. 

On  October  18,  1916,  the  Japanese  Minister  handed  to 
the  Chinese  Minister  of  Foreign  Affairs  the  following 
aide  memoire  in  which,  as  will  be  seen,  a  general  right 
was  claimed  upon  the  part  of  Japan  to  station  police 
officers  in  any  places  in  Manchuria  or  Eastern  Inner 
Mongolia  where  Japan  might  deem  it  desirable : 

According  to  the  new  treaty  conclnded  last  year  respecting 
South  Manchuria  and  Eastern  Inner  MongoUa,  Japanese  subjects 
shall  have  the  right  of  residence,  travel  and  commercial  and  indus- 
trial trade  in  South  Manchuria,  and  the  right  to  undertake  agricul- 
tural enterprises  and  industries  incidental  thereto  in  the  eastern 
part  of  Inner  Mongolia  Jointly  with  Chinese  subjects.  The  number 
of  Japanese  subjects  in  South  Manchuria  and  Eastern  Inner  Mon- 
golia will,  therefore,  inevitably  increase  gradually.  The  Imperial 
Government  of  Japan  considers  it  necessary  to  station  Japanese 
police  officers  in  these  regions  for  the  purpose  of  controlling  and 
protecting  their  own  subjects.  It  is  a  fact  that  a  number  of  Japan- 
ese poHce  officers  have  already  been  stationed  in  the  interior  of 
South  Manchuria  and  they  have  been  recognized  by  the  local  offi- 


84      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

cials  of  the  localities  concerned  since  intercourse  has  been  conducted 
between  them.  The  Imperial  Government  of  Japan  proposes  grad- 
ually to  establish  additional  stations  for  Japanese  police  officers  in 
the  interior  of  South  Manchuria  and  Eastern  Inner  Mongolia 
wherever  and  whenever  necessary.  The  localities  where  such  sta- 
tions for  police  officers  are  to  be  established  will  of  course  depend 
upon  the  number  of  Japanese  subjects  residing  thereat  and  there- 
fore cannot  be  specified  in  advance.  Since  this  will  involve  great 
e:q)ense,  it  is  unlikely  that  many  police  stations  will  be  established 
at  once.  The  organization  of  such  stations  for  police  officers  will 
also  depend  upon  the  existing  conditions  of  the  localities  selected 
and  the  number  of  Japanese  subjects  residing  at  such  places.  There 
will  be  only  a  few  Japanese  police  officers  at  each  station  as  estab- 
lished. The  more  important  duties  of  such  police  officers  are  as 
follows : 

"1.    To  prevent  Japanese  subjects  from  committing  crimes; 

"  2.    To  protect  Japanese  subjects  when  attacked ; 

"3.  To  search,  arrest  and  escort  Japanese  prisoners  under  the 
jurisdiction  of  a  Japanese  consulate; 

"  4.  To  attend  to  the  enforcement  of  consular  orders  in  connec- 
tion with  civil  cases,  such  as  the  duties  of  the  registrar ; 

"  5.  Investigation  and  supervision  of  the  personal  standing  of 
Japanese  subjects; 

"  6.  Control  and  discipline  of  Japanese  subjects,  who  violate  the 
provisions  of  treaties  between  Japan  and  China ;  and 

"  7.  To  see  that  Japanese  subjects  abide  by  the  provisions  of 
Chinese  police  regulations  when  the  agreement  between  Japan  and 
China  respecting  the  same  should  actually  come  into  force. 

"  In  short,  the  establishment  of  stations  for  Japanese  police 
officers  in  South  Manchuria  and  Eastern  Inner  Mongolia  is  based 
on  consular  jurisdiction,  and  its  aim  is  efficiently  to  protect  and 
discipline  Japanese  subjects,  to  bring  about  a  completely  satisfac- 
tory relationship  between  the  officials  and  people  of  the  two  coun- 
tries, and  gradually  to  develop  the  financial  relations  between  Japan 
and  China.  The  Chinese  Government  is  requested  speedily  to  rec- 
ognize the  demands  precisely  as  it  has  the  establishment  of  con- 
sulates and  consular  agents  in  the  interior  of  South  Manchuria  in 


EXTBATERRITORIALITY  85 

pursuance  of  the  policy  to  maintain  the  friendly  relations  between 
China  and  Japan."  *^ 

In  a  Note  Verhale  handed  to  the  Chinese  Minister  of 
Foreign  Affairs  by  the  Japanese  Minister  on  January  5, 
1917,  the  foregoing  Aide  Memoire  was  recited  and  again 
called  to  the  attention  of  the  Chinese  Grovemment.  The 
action  at  this  time  was  in  connection  with  the  demands 
which  Japan  was  then  making  upon  China  based  upon 
the  Chengchiatun  Affair.®^    The  Note  Verhale  declared: 

The  Imperial  Government  consider  that  the  said  demand,  in 
the  event  of  its  withdrawal,  will  expose  the  Japanese  subjects,  visit- 
ing and  residing  at  those  places  [in  Manchuria  and  Mongoha]  to 
danger,  thus  causing  trouble  and  giving  rise  to  serious  comphca- 
tions  with  Chinese  oflScials  and  citizens.  Inasmuch  as  it  is  the 
duty  of  the  Imperial  [Japanese]  Government  to  protect  Japanese 
subjects  and  its  right  to  control  them,  not  only  it  cannot  view  such 
occurrences  with  indifference,  but  in  view  of  the  friendly  relations 
between  the  two  nations,  it  also  deems  it  its  duty  to  take  precau- 
tionary measures.  As  the  stationing  of  Japanese  pohce  officers  is 
but  a  corollary  of  the  rights  of  extraterritoriahty,  not  to  speak  of 
the  fact  that  it  does  not  in  the  least  prejudice  Chinese  sovereignty, 
it  will  help  to  improve  the  relations  of  the  officials  and  peoples  of 
the  two  countries  and  bring  about  the  development  of  economic  in- 
terests to  no  small  degree.  Therefore  the  Imperial  [Japanese] 
Government  is  convinced  that  the  Chinese  Government  will,  with- 
out doubt,  give  its  consent,  and  the  Imperial  Government  has  to 
add  that  while  the  Chinese  Government  is  making  up  its  mind  and 
withholding  its  consent  the  Imperial  Government  will  nevertheless 
be  constrained  to  carry  it  into  effect  in  case  of  necessity. 

Eeplying  to  this  note,  the  Chinese  Minister  of  Foreign 
Affairs  called  attention  to  the  fact  that  Japanese  subjects 
in  the  regions  named  were  obligated  by  the  treaty  to 

•*  For  the  text  of  this  Aide  M&moire,  see  MacMurray,  p.  1917/2. 
•*See  post,  Chapter  XI. 


86      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

submit  to  Ohinese  police  laws  and  ordinances  and  that 
there  was,  therefore,  no  necessity  for  the  presence  of 
Japanese  police  officers.  The  question  of  police,  the 
Minister  declared,  could  not  be  associated  with  extra- 
territoriality and  the  Chinese  Government  could  not 
recognize  the  stationing  of  foreign  police  as  a  corollary 
of  extraterritorial  jurisdiction.  The  Chinese  Minister 
continued : 

Although  the  Japanese  Minister  has  repeatedly  declared  that 
the  said  pohee  would  not  interfere  with  Chinese  local  administra- 
tion and  police  rights,  yet  after  serious  consideration  hy  the  Chinese 
Government  the  stationing  of  foreign  pohce  within  the  confines  of 
Chinese  territory,  no  matter  under  whatever  circumstances,  is  preju- 
dicial to  the  spirit  and  form  of  Chinese  sovereignty  tending  to  cause 
misunderstanding  on  the  part  of  the  people,  thus  placing  an  impedi- 
ment to  the  friendship  of  the  two  nations.  As  regards  the  Japanese 
police  stations  already  estabhshed  the  Chinese  Government  and  the 
local  authorities  have  repeatedly  lodged  their  protests  and  have  not 
accorded  their  recognition,  nor  is  the  Chinese  Government  able  to 
admit  the  reasons  for  the  stationing  of  Japanese  police  oflBcers  as 
stated  in  the  Note  Verbale. 

In  result,  the  Chinese  Government  was,  upon  this  occa- 
sion, able  to  avoid  making  the  formal  concession  which 
Japan  demanded,  but  she  has  never  been  able,  in  fact,  to 
prevent  the  Japanese  from  maintaining  troops  and  police 
officers  at  various  points  in  Manchuria  and  Eastern  Inner 
Mongolia,  nor,  for  that  matter,  in  other  parts  of  China, 
as,  for  example,  at  Hankow  where  a  considerable  detach- 
ment of  soldiers  has  for  some  years  been  maintained. 
Also,  Japan  has  claimed  and  exercised  the  right  to  keep 
considerable  bodies  of  troops  at  various  points  in  Man- 
churia as  *'  Railway  Guards  "  for  the  South  Manchuria 
Railway. 


EXTEATEEEITORIALITY  87 

It  would  seem  beyond  argument  that  Japan,  in  the 
position  which  she  has  taken  in  this  matter  of  police 
boxes,  has  acted  not  only  without  express  treaty 
authority,  but  that  the  right  claimed  is  not  involved  in 
the  general  principle  of  extraterritoriality  as  it  exists  in 
China — ^indeed  that  it  is  in  absolute  contradiction  to  it. 

Dr.  C.  C.  Wu,  a  trained  barrister,  and  former  Coun- 
sellor of  the  Chinese  Foreign  Office,  writing  upon  this 
matter  in  1917,  said : 

From  actual  experience  we  know  that  the  activities  of  these 
foreign  poHce  will  not  be  confined  to  their  countrymen ;  in  a  dispute 
between  a  Chinese  and  a  Japanese,  both  will  be  taken  to  the  Japan- 
ese station  by  the  Japanese  pohceman.  This  existence  of  an  im- 
perium  in  imperio,  so  far  from  accomplishing  its  avowed  right  of 
improving  the  relations  of  the  countries  and  bringing  about  the 
development  of  economic  interests  to  no  small  degree,  will,  it  is 
feared,  be  the  cause  of  continual  friction  between  the  officials  and 
peoples  of  the  two  countries. 

As  to  the  legal  contention  that  the  right  of  pohce  control  is  a 
natural  corollary  to  the  right  of  extraterritoriahty,  it  must  be  said 
that  ever  since  the  grant  of  consular  jurisdiction  to  foreigners  by 
China  in  her  first  treaties,  this  is  the  first  time  that  such  a  claim 
has  been  seriously  put  forward.  We  can  only  say  that  if  this  inter- 
pretation of  extraterritoriahty  is  correct  the  other  nations  have  been 
very  neglectful  in  the  assertion  of  their  Just  rights."* 

Extraterritorial  Rights  in  Leased  Territories.  This  sub- 
ject is  discussed  in  the  chapter  dealing  with  Leased 
Territories.®^ 


"These  paragraphs  are  taken  from  a  paper  prepared  by  Dr.  Wu  in 
which  he  described  the  "  Outstanding  Cases  between  China  and  the  Foreign 
Powers."  The  paper  is  published  by  Mr.  Putnam  Weale  among  the  Appen- 
dices to  his  The  Fight  for  the  Republic. 

•  See,  post,  Chapter  XI. 


88      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

APPENDIX   A 

United  States  Revised  Statutes  Relating  to  Consular  Jurisdiction 

Sec.  4083.  To  carry  into  full  effect  the  provisions  of  the  trea- 
tries  of  the  United  States  with  China,  Japan,  Siam,  Egypt,  and 
Madagascar,  respectively,  the  minister  and  the  consuls  of  the 
United  States  duly  appointed  to  reside  in  each  of  those  countries, 
shall,  in  addition  to  other  powers  and  duties  imposed  upon  them, 
respectively,  by  the  provisions  of  such  treaties  respectively,  be 
invested  with  the  judicial  authority  herein  described,  which  shall 
appertain  to  the  office  and  minister  and  consul,  and  be  a  part  of  the 
duties  belonging  thereto,  wherein,  and  so  far  as,  the  same  is  allowed 
by  treaty. 

Sec.  4084.  The  officers  mentioned  in  the  preceding  section  are 
fully  empowered  to  arraign  and  try,  in  the  manner  herein  provided, 
all  citizens  of  the  United  States  charged  with  offenses  against  law, 
committed  in  such  countries,  respectively,  and  to  sentence  such 
offenders  in  the  manner  herein  authorized;  and  each  of  them  is 
authorized  to  issue  all  such  processes  as  are  suitable  and  necessary 
to  carry  this  authority  into  execution. 

Sec.  4085.  Such  officers  are  also  invested  with  all  the  judicial 
authority  necessary  to  execute  the  provisions  of  such  treaties,  re- 
spectively, in  regard  to  civil  rights,  whether  of  property  or  person ; 
and  they  shall  entertain  jurisdiction  in  matters  of  contract,  at  the 
port  where,  or  nearest  to  which,  the  contract  was  made,  or  at  the 
port  at  which,  or  nearest  to  which,  it  was  to  be  executed,  and  in 
all  other  matters  at  the  port  where,  or  nearest  to  which,  the  cause 
of  controversy  arose,  or  at  the  port  where,  or  nearest  to  which,  the 
damage  complained  of  was  sustained,  provided  such  port  be  one  of 
the  ports  at  which  the  United  States  are  represented  by  consuls. 
Such  jurisdiction  shall  embrace  all  controversies  between  citizens 
of  the  United  States,  or  others,  provided  for  by  such  treaties 
respectively. 

Sec.  4086.  Jurisdiction  in  both  civil  and  criminal  matters 
shall,  in  all  cases,  be  exercised  and  enforced  in  conformity  with 


EXTEATEERITORIALITY  89 

the  laws  of  the  United  States,  which  are  hereby,  so  far  as  is  neces- 
sary to  execute  such  treaties,  respectively,  and  as  far  as  they  are 
suitable  to  carry  the  same  into  effect,  extended  over  all  citizens  of 
the  United  States  in  those  countries,  and  over  all  others  to  the 
extent  that  the  terms  of  the  treaties,  respectively,  justify  or  require. 
But  in  all  cases  where  such  laws  are  not  adapted  to  the  object,  or 
are  deficient  in  the  provisions  necessary  to  furnish  suitable  reme- 
dies, the  common  law  and  the  law  of  equity  and  admiralty  shall 
be  extended  in  like  manner  over  such  citizens  and  others  in  those 
countries;  and  if  neither  the  common  law,  nor  the  law  of  equity 
or  admiralty,  nor  the  statutes  of  the  United  States  furnish  appro- 
priate and  sufficient  remedies,  the  ministers  in  those  countries,  re- 
spectively, shall,  by  decrees  and  regulations  which  shall  have  the 
force  of  law,  supply  such  defects  and  deficiencies. 

Sec.  4087.  Each  of  the  consuls  mentioned  in  Section  4183,  at 
the  port  for  which  he  is  appointed,  is  authorized  upon  facts  within 
his  own  knowledge,  or  which  he  has  good  reason  to  believe  true, 
or  upon  complaint  made  or  information  filed  in  writing  and  au- 
thenticated in  such  way  as  shall  be  prescribed  by  the  minister,  to 
issue  his  warrant  for  the  arrest  of  any  citizen  of  the  United  States 
charged  with  committing  in  the  country  an  offence  against  law; 
and  to  arraign  and  try  such  offender;  and  to  sentence  him  to  pun- 
ishment in  the  manner  herein  prescribed. 

[Sec.  4088  refers  to  consular  jurisdiction  in  countries  not  inhab- 
ited by  civilized  peoples  or  recognized  by  any  treaty  with  the 
United  States.] 

Sec.  4089.  Any  consul  when  sitting  alone  may  also  decide  all 
cases  in  which  the  fine  imposed  does  not  exceed  five  hundred  dol- 
lars, or  the  term  of  imprisonment  does  not  exceed  ninety  days ;  but 
in  all  such  cases,  if  the  fine  exceeds  one  hundred  dollars,  or  the 
term  of  imprisonment  for  misdemeanor  exceeds  sixty  days,  the  de- 
fendants or  any  of  them,  if  there  be  more  than  one,  may  take  the 
case,  by  appeal,  before  the  minister,  if  allowed  jurisdiction,  either 
upon  errors  of  law  or  matters  of  fact,  under  such  rules  as  may  be 
prescribed  by  the  minister  for  the  prosecution  of  appeals  in  such 
cases. 


90      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Sec,  4090,  Capital  cases  for  murder  or  insurrection  against  the 
government  of  either  of  the  countries  hereinbefore  mentioned,  by 
citizens  of  the  United  States,  or  for  offenses  against  the  public 
peace  amounting  to  felony  under  the  laws  of  the  United  States, 
may  be  tried  before  the  minister  of  the  United  States  in  the  country 
where  the  offense  is  committed  if  allowed  jurisdiction;  and  every 
such  minister  may  issue  all  manner  of  writs,  to  prevent  the  citizens 
of  the  United  States  from  enlisting  in  the  military  or  naval  service 
of  either  of  the  said  countries,  to  make  war  upon  any  foreign  power 
with  whom  the  United  States  are  at  peace,  or  in  the  service  of  one 
portion  of  the  people  against  any  other  portion  of  the  same  people ; 
and  he  may  carry  out  this  power  by  a  resort  to  such  force  belonging 
to  the  United  States,  as  may  at  the  time  be  within  his  reach. 

Sec.  4091.  Each  of  the  ministers  mentioned  in  section  forty 
hundred  and  eighty-three  shall,  in  the  country  to  which  he  is  ap- 
pointed, be  fully  authorized  to  hear  and  decide  all  cases,  criminal 
and  civil,  which  may  come  before  him,  by  appeal,  under  the  pro- 
visions of  this  Title,  and  to  issue  all  processes  necessary  to  execute 
the  power  conferred  upon  him ;  and  he  is  fully  empowered  to  decide 
finally  any  case  upon  the  evidence  which  comes  up  with  it,  or  to 
hear  the  parties  further,  if  he  thinks  justice  will  be  promoted 
thereby ;  and  he  may  also  prescribe  the  rules  upon  which  new  trials 
may  be  granted,  either  by  the  consuls  or  by  himself,  if  asked  for 
upon  sufficient  grounds. 

Sec.  4092.  On  any  final  judgment  in  a  consular  court  of  China 
or  Japan,  where  the  matter  in  dispute  exceeds  five  hundred  dollars 
and  does  not  exceed  two  thousand  five  hundred  dollars,  exclusive  of 
costs,  an  appeal  shall  be  allowed  to  the  minister  in  such  country, 
as  the  case  may  be.  But  the  appellant  shall  comply  with  the  con- 
ditions established  by  general  regulations.  And  the  ministers  are 
hereby  authorized  and  required  to  receive,  hear  and  determine  such 
appeals. 

Sec.  4093.  On  any  final  judgment  in  any  consular  court  of 
China  or  Japan,  where  the  matter  in  dispute,  exclusive  of  costs, 
exceeds  the  sum  of  two  thousand  five  hundred  dollars,  an  appeal 
shall  be  allowed  to  the  circuit  court  for  the  district  of  California, 


EXTKATEEEITOEIALITY  91 

and  upon  such  appeal  a  transcript  of  the  libel,  bill,  answer,  deposi- 
tions, and  all  other  proceedings  shall  be  transmitted  to  the  circuit 
court,  and  no  new  evidence  shall  be  received  on  the  hearing  of  the 
appeal;  and  the  appeal  shall  be  subject  to  the  rules,  regulations, 
and  restrictions  prescribed  in  law  for  writs  of  error  from  district 
courts  to  circuit  courts. 

Sec.  4094.  On  any  final  judgment  of  the  minister  to  China,  or 
to  Japan,  given  in  the  exercise  of  original  jurisdiction,  where  the 
matter  in  dispute,  exclusive  of  costs,  exceeds  two  thousand  five  hun- 
dred dollars,  an  appeal  shall  be  allowed  to  the  circuit  court,  as  pro- 
vided in  the  preceding  section. 

Sec.  4095.  When  any  final  judgment  of  the  minister  to  China, 
or  to  Japan,  is  given  in  the  exercise  of  original  or  of  appellate  crim- 
inal jurisdiction,  the  person  charged  with  the  crime  or  offense,  if 
he  considers  the  judgment  erroneous  in  point  of  law,  may  appeal 
therefrom  to  the  circuit  court  for  the  district  of  California;  but 
such  appeal  shall  not  operate  as  a  stay  of  proceedings,  unless  the 
minister  certifies  that  there  is  probable  cause  to  grant  the  same, 
when  the  stay  shall  be  such  as  the  interests  of  justice  may  require. 

Sec.  4096.  The  circuit  court  for  the  district  of  California  is 
authorized  and  required  to  receive,  hear,  and  determine  the  appeals 
provided  for  in  this  Title,  and  its  decisions  shall  be  final. 

Sec.  4097.  In  all  cases,  criminal  and  civil,  the  evidence  shall  be 
taken  down  in  writing  in  open  court,  under  such  regulations  as 
may  be  made  for  that  purpose ;  and  all  objections  to  the  competency 
or  character  of  testimony  shall  be  noted,  with  the  ruling  in  aU  such 
cases,  and  the  evidence  shall  be  part  of  the  case. 

Sec.  4098.  It  shall  be  the  duty  of  the  ministers  and  the  consuls 
in  the  countries  mentioned  in  section  forty  hundred  and  eighty- 
three,  to  encourage  the  settlement  of  controversies  of  a  civil  char- 
acter, by  mutual  agreement,  or  to  submit  them  to  the  decision  of 
referees  agreed  upon  by  the  parties ;  and  the  minister  in  each  coun- 
try shall  prepare  a  form  of  submission  for  such  cases,  to  be  signed 
by  the  parties,  and  acknowledged  before  the  consul.  When  parties 
have  so  agreed  to  refer,  the  referees  may,  after  suitable  notice  of 


92      rOEEIGN  RiaHTS  AND  INTERESTS  IN  CHINA 

the  time  and  place  of  meeting  for  the  trial,  proceed  to  hear  the  case, 
and  a  majority  of  them  shall  have  power  to  decide  the  matter.  If 
either  party  refuses  or  neglects  to  appear,  the  referees  may  pro- 
ceed ex  parte.  After  hearing  any  case  such  referees  may  deliver 
their  award,  sealed,  to  the  consul,  who,  in  court>  shall  open  the 
same;  and  if  he  accepts  it,  he  shall  indorse  the  fact,  and  judgment 
shall  be  rendered  thereon,  and  execution  issue  in  compliance  with 
the  terms  thereof.  The  parties,  however,  may  always  settle  the 
same  before  return  thereof  is  made  to  the  consul. 

Sec.  4099.  In  all  criminal  cases  which  are  not  of  a  heinous 
character,  it  shaU  be  lawful  for  the  parties  aggrieved  or  concerned 
therein,  with  the  assent  of  the  minister  in  the  coimtry,  or  consul, 
to  adjust  and  settle  the  same  among  themselves,  upon  pecuniary  or 
other  considerations. 

Sec.  4100.  The  ministers  and  consuls  shall  be  fully  authorized 
to  caU  upon  the  local  authorities  to  sustain  and  support  them  in  the 
execution  of  the  powers  confided  to  them  by  treaty,  and  on  their 
part  to  do  and  perform  whatever  is  necessary  to  carry  the  provisions 
of  the  treaties  into  full  effect,  so  far  as  they  are  to  be  executed  in 
the  countries,  respectively. 

Sec.  4101.  In  all  cases,  except  as  herein  otherwise  provided,  the 
punishment  of  crime  provided  for  by  this  Title  shall  be  by  fine  or 
imprisonment,  or  both,  at  the  discretion  of  the  oflBcer  who  decides 
the  case,  but  subject  to  the  regulations  herein  contained,  and  such 
as  may  hereafter  be  made.  It  shall,  however,  be  the  duty  of  such 
officer  to  award  punishment  according  to  the  magnitude  and  aggra- 
vation of  the  offense.  Every  person  who  refuses  or  neglects  to 
comply  with  the  sentence  passed  upon  him  shall  stand  committed 
until  he  does  comply,  or  is  discharged  by  order  of  the  consul,  with 
the  consent  of  the  minister  in  the  country. 

Sec.  4102.  Insurrection  or  rebellion  against  the  government  of 
either  of  those  countries,  with  intent  to  subvert  the  same,  and  mur- 
der, shall  be  capital  offenses,  punishable  with  death ;  but  no  person 
shall  be  convicted  of  either  of  those  crimes,  unless  the  consul  and 
his  associates  in  the  trial  all  concur  in  opinion,  and  the  minister 
also  approves  of  the  conviction.    But  it  shall  be  lawful  to  convict 


EXTEATERRITORIALITY  93 

one  put  npon  trial  for  either  of  these  crimes,  of  a  less  offense  of  a 
similar  character,  if  the  evidence  justifies  it,  and  to  punish,  as  for 
other  offenses,  by  fine  or  imprisonment,  or  both. 

Sec.  4103.  Whenever  any  person  is  convicted  of  either  of  the 
crimes  punishable  with  death,  in  either  of  those  countries,  it  shall 
be  the  duty  of  the  minister  to  issue  his  warrant  for  the  execution 
of  the  convict,  appointing  the  time,  place,  and  manner;  but  if  the 
minister  is  satisfied  that  the  ends  of  public  justice  demand  it,  he 
may  from  time  to  time  postpone  such  execution;  and  if  he  finds 
mitigating  circumstances  which  authorize  it,  he  may  submit  the 
case  to  the  President  for  pardon. 

Sec.  4104.  No  fine  imposed  by  a  consul  for  a  contempt  com- 
mitted in  presence  of  the  court,  or  for  failing  to  oibey  a  summons 
from  the  same,  shall  exceed  fifty  dollars;  nor  shall  the  imprison- 
ment exceed  twenty-four  hours  for  the  same  contempt. 

Sec.  4105.  Any  consul,  when  sitting  alone  for  the  trial  of 
offenses  or  misdemeanors,  shall  decide  finally  all  cases  where  the 
fine  imposed  does  not  exceed  one  hundred  doUars,  or  the  term  of 
imprisonment  does  not  exceed  fifty  days. 

Sec.  4106.  Whenever,  in  any  case,  the  consul  is  of  opinion  that, 
by  reason  of  the  legal  questions  which  may  arise  therein,  assistance 
will  be  useful  to  him,  or  whenever  he  is  of  opinion  that  severer 
punishments  than  those  specified  in  the  preceding  sections  will  be 
required,  he  shall  summon,  to  sit  with  him  on  the  trial,  one  or  more 
citizens  of  the  United  States,  not  exceeding  four,  and  in  capital 
cases  not  less  than  four,  who  shall  be  taken  by  lot  from  a  list  which 
had  previously  been  submitted  to  and  approved  by  the  minister, 
and  shall  be  persons  of  good  repute  and  competent  for  the  duty. 
Every  such  associate  shall  enter  upon  the  record  his  judgment  and 
opinion,  and  shall  sign  the  same;  but  the  consul  shall  give  judg- 
ment in  the  case.  If  the  consul  and  associates  concur  in  opinion, 
the  decision  shall,  in  all  cases,  except  of  capital  offenses  and  except 
as  provided  in  the  preceding  section,  be  final.  If  any  of  the  asso- 
ciates differ  in  opinion  from  the  consul,  the  case,  without  further 
proceedings,  together  with  the  evidence  and  opinions,  shall  be  re- 
ferred to  the  minister  for  his  adjudication,  either  by  entering  up 


94      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

judgment  therein,  or  by  remitting  the  same  to  the  consul  with  in- 
structions how  to  proceed  therewith. 

Sec.  4107.  Each  of  the  consuls  mentioned  in  section  four  thou- 
sand and  eighty-three  shall  have  at  the  port  for  which  he  is  ap- 
pointed, jurisdiction  as  herein  provided,  in  all  civil  cases  arising 
under  such  treaties,  respectively,  wherein  the  damages  demanded 
do  not  exceed  the  sum  of  five  hundred  dollars;  and,  if  he  sees  fit 
to  decide  the  same  without  aid,  his  decision  thereon  shall  be  final. 
But  whenever  he  is  of  opinion  that  any  such  case  involves  legal 
perplexities,  and  that  assistance  will  be  useful  to  him,  or  whenever 
the  damages  demanded  exceed  five  hundred  dollars,  he  shall  sum- 
mon, to  sit  with  him  on  the  hearing  of  the  case,  not  less  than  two 
nor  more  than  three  citizens  of  the  United  States,  if  such  are  re- 
siding at  the  port,  who  shall  be  taken  from  a  list  which  had  pre- 
viously been  submitted  to  and  approved  by  the  minister,  and  shall 
be  of  good  repute  and  competent  for  the  duty.  Every  such  asso- 
ciate shaU  note  upon  the  record  his  opinion,  and  also,  in  case  he 
dissents  from  the  consul,  such  reasons  therefore  as  he  thinks  proper 
to  assign;  but  the  consul  shall  give  judgment  in  the  case.  If  the 
consul  and  his  associates  concur  in  opinion,  the  judgment  shall  be 
final.  If  any  of  the  associates  differ  in  opinion  from  the  consul, 
either  party  may  appeal  to  the  minister,  under  such  regulations  as 
may  exist ;  but  if  no  appeal  is  lawfully  claimed,  the  decision  of  the 
consul  shall  be  final. 

Sec.  4108.  The  jurisdiction  allowed  by  treaty  to  the  ministers, 
respectively,  in  the  countries  named  in  section  four  thousand  and 
eighty-three  shall  be  exercised  by  them  in  those  countries,  respec- 
tively, wherever  they  may  be. 

Sec.  4109.  The  jurisdiction  of  such  ministers  in  aU  matters  of 
civil  redress,  or  of  crimes,  except  in  capital  cases  for  murder  or 
insurrection  against  the  governments  of  such  countries,  respec- 
tively, or  for  offenses  against  the  public  peace  amounting  to  felony 
under  the  laws  of  the  United  States,  shall  be  appellate  only :  Pro- 
vided, That  in  cases  where  a  consular  officer  is  interested,  either  as 
party  or  witness,  such  minister  shall  have  original  jurisdiction. 


EXTEATEEEITOEIALITY  95 

Sec.  4110.  All  such  officers  shall  be  responsible  for  their  conduct 
to  the  United  States,  and  to  the  laws  thereof,  not  only  as  diplomatic 
or  consular  officers,  but  as  judicial  officers,  when  they  perform  judi- 
cial duties,  and  shall  be  held  liable  for  all  negligence  and  miscon- 
duct as  public  officers. 

Sec.  4111.  The  President  is  authorized  to  appoint  marshals  for 
such  of  the  consular  courts  in  those  countries  as  he  may  think 
proper,  not  to  exceed  seven  in  number,  namely :  one  in  Japan,  four 
in  China,  one  in  Siam,  and  one  in  Turkey,  each  of  whom  shall 
receive  a  salary  of  one  thousand  dollars  a  year,  in  addition  to  the 
fees  allowed  by  the  regulations  of  the  ministers,  respectively,  in 
those  countries. 

[Sections  4112-4116  relate  to  the  duties  and  liabilities  of  the 
marshals.] 

Sec.  4117.  In  order  to  organize  and  carry  into  effect  the  system 
of  jurisprudence  demanded  by  such  treaties,  respectively,  the  min- 
isters, with  the  advice  of  the  several  consuls  in  each  of  the  countries, 
respectively,  or  of  so  many  of  them  as  can  be  conveniently  assem- 
bled, shall  prescribe  the  forms  of  all  processes  to  be  issued  by  any 
of  the  consuls ;  the  mode  of  executing  and  the  time  of  returning  the 
same;  the  manner  in  which  trials  shall  be  conducted,  and  how  the 
records  thereof  shall  be  kept;  the  form  of  oaths  for  Christian  wit- 
nesses, and  the  mode  of  examining  all  other  witnesses ;  the  costs  to 
be  allowed  to  the  prevailing  party,  and  the  fees  to  be  paid  for  judi- 
cial services ;  the  manner  in  which  all  officers  and  agents  to  execute 
process,  and  to  carry  this  Title  into  effect,  shall  be  appointed  and 
compensated;  the  form  of  bail-bonds,  and  the  security  which  shall 
be  required  of  the  party  who  appeals  from  the  decision  of  the  con- 
sul; and  shall  make  all  such  further  decrees  and  regulations  from 
time  to  time,  under  the  provisions  of  this  Title,  as  the  exigency  may 
demand. 

Sec.  4118.  All  such  regulations,  decrees,  and  orders  shall  be 
plainly  drawn  up  in  writing,  and  submitted,  as  hereinbefore  pro- 
vided, for  the  advice  of  the  consuls,  or  as  many  of  them  as  can  be 
consulted  without  prejudicial  delay  or  inconvenience,  and  such 
consul  shall  signify  his  assent  or  dissent  in  writing,  with  his  name 


96      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

subscribed  thereto.  After  taking  such  advice,  and  considering  the 
same,  the  minister  in  each  of  those  countries  may,  nevertheless,  by 
causing  the  decree,  order,  or  regulation  to  be  published  with  his 
signature  thereto,  and  the  opinions  of  his  advisers  inscribed  thereon, 
make  it  binding  and  obligatory,  until  annulled  or  modified  by  Con- 
gress; and  it  shall  take  effect  from  the  publication  or  any  subse- 
quent day  thereto  named  in  the  act. 

Sec.  4119.  All  such  regulations,  orders,  and  decrees  shall,  as 
speedily  as  may  be  after  publication,  be  transmitted  by  the  minis- 
ters, with  the  opinions  of  their  advisers,  as  drawn  up  by  them  sev- 
erally, to  the  Secretary  of  State,  to  be  laid  before  Congress  for 
revision. 

Sec.  4120.  It  shall  be  the  duty  of  the  minister  in  each  of  those 
countries  to  establish  a  tariff  of  fees  for  judicial  services,  which 
shall  be  paid  by  such  parties,  and  to  such  persons,  as  the  minister 
shall  direct ;  and  the  proceeds  shall,  as  far  as  is  necessary,  be  applied 
to  defray  the  expenses  incident  to  the  execution  of  this  Title ;  and 
regular  accounts,  both  of  receipts  and  expenditures,  shall  be  kept 
by  the  minister  and  consuls  and  transmitted  annually  to  the  Sec- 
retary of  State. 

[Sections  4120  and  4122  relate  to  the  expenses  of  prisons  in 
China.] 

APPENIDIX   B 

Act  Establishing  the  United  States  Court  for  China 

Be  it  enacted  hy  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assemiled.  That  a  court  is 
hereby  established,  to  be  called  the  United  States  court  for  China, 
which  shall  have  exclusive  jurisdiction  in  all  cases  and  judicial 
proceedings  whereof  jurisdiction  miiay  now  be  exercised  by  United 
States  consuls  and  ministers  by  law  and  by  virtue  of  treaties  be- 
tween the  United  States  and  China,  except  in  so  far  as  the  said 
jurisdiction  is  qualified  by  section  two  of  this  Act.  The  said  court 
shall  hold  sessions  at  Shanghai,  China,  and  shall  also  hold  sessions 
at  the  cities  of  Canton,  Tientsin,  and  Hankau  at  stated  periods, 
the  dates  of  such  sessions  at  each  city  to  be  announced  in  such 


EXTEATERRITOEIALITY  97 

manner  as  the  court  shall  direct,  and  a  session  of  the  court  shall 
be  held  in  each  of  these  cities  at  least  once  annually.  It  shall  be 
within  the  power  of  the  judge,  upon  due  notice  to  the  parties  in 
litigation,  to  open  and  hold  court  for  the  hearing  of  a  special  cause 
at  any  place  permitted  by  the  treaties,  and  where  there  is  a  United 
States  consulate,  when,  in  his  judgment,  it  shall  be  required  by  the 
convenience  of  witnesses,  or  by  some  public  interest.  The  place  of 
sitting  of  the  court  shall  be  in  the  United  States  consulate  at  each 
of  the  cities,  respectively. 

That  the  seal  of  the  said  United  States  court  for  China  shall  be 
the  arms  of  the  United  States,  engraved  on  a  circular  piece  of  steel 
of  the  size  of  a  half  dollar,  with  these  words  on  the  margin,  "  The 
Seal  of  the  United  States  Court  for  China." 

The  seal  of  said  court  shall  be  provided  at  the  expense  of  the 
United  States. 

All  writs  and  processes  issuing  from  the  said  court,  and  all  tran- 
scripts, records,  copies,  jurats,  acknowledgments,  and  other  papers 
requiring  certification  or  to  be  under  seal,  may  be  authenticated 
by  said  seal,  and  shall  be  signed  by  the  clerk  of  said  court.  All 
processes  issued  from  the  said  court  shall  bear  test  from  the  day 
of  such  issue. 

Sec.  2.  The  consuls  of  the  United  States  in  the  cities  of  China 
to  which  they  are  respectively  accredited  shaU  have  the  same 
jurisdiction  as  they  now  possess  in  civil  cases  where  the  sum  or 
value  of  the  property  involved  in  the  controversy  does  not  exceed 
five  hundred  dollars  United  States  money  and  in  criminal  cases 
where  the  punishment  for  the  offense  charged  can  not  exceed  by 
law  one  hundred  dollars  fine  or  sixty  days'  imprisonment,  or  both, 
and  shall  have  power  to  arrest,  examine,  and  discharge  accused 
persons  or  commit  them  to  the  said  court.  From  all  final  judg- 
ments of  the  consular  court  either  party  shall  have  the  right  of 
appeal  to  the  United  States  court  for  China :  Provided,  also.  That 
appeal  may  be  taken  to  the  United  States  court  for  China  from 
any  final  judgment  of  the  consular  courts  of  the  United  States  in 
Korea  so  long  as  the  rights  of  extraterritoriality  shall  obtain  in 
favor  of  the  United  States.  The  said  United  States  court  for 
China  shall  have  and  exercise  supervisory  control  over  the  dis- 
7 


98      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

charge  by  consuls  and  vice-consuls  of  the  duties  prescribed  by  the 
laws  of  the  United  States  relating  to  the  estates  of  decedents  in 
China.  Within  sixty  days  after  the  death  in  China  of  any  citizen 
of  the  United  States,  or  any  citizen  of  any  territory  belonging  to 
the  United  States,  the  consul  or  vice-consul  whose  duty  it  becomes 
to  take  possession  of  the  effects  of  such  deceased  person  under  the 
laws  of  the  United  States  shall  file  with  the  clerk  of  said  court  a 
sworn  inventory  of  such  effects,  and  shall  as  additional  effects  come 
from  time  to  time  into  his  possesion  immediately  file  a  supple- 
mental inventory  or  inventories  of  the  same.  He  shall  also  file 
vrith  the  clerk  of  said  court  vrithin  said  sixty  days  a  schedule  under 
oath  of  the  debts  of  said  decedent,  so  far  as  known,  and  a  schedule 
or  statement  of  all  additional  debts  thereafter  discovered.  Such 
consul  or  vice-consul  shall  pay  no  claims  against  the  estate  without 
the  written  approval  of  the  judge  of  said  court,  nor  shall  he  make 
sale  of  any  of  the  assets  of  said  estate  without  first  reporting  the 
same  to  said  judge  and  obtaining  a  written  approval  of  said  sale, 
and  he  shall  likewise  within  ten  days  after  any  such  sale  report 
the  fact  of  such  sale  to  said  court,  and  the  amount  derived  there- 
from. The  said  judge  shall  have  power  to  require  at  any  time 
reports  from  consuls  or  vice-consuls  in  respect  of  all  their  acts  and 
doings  relating  to  the  estate  of  any  such  deceased  person.  The 
said  court  shall  have  power  to  require  w^here  it  may  be  necessary 
a  special  bond  for  the  faithful  performance  of  his  duty  to  be  given 
by  any  consul  or  vice-consul  into  whose  possession  the  estate  of 
any  such  deceased  citizen  shall  have  come  in  such  amount  and  with 
such  sureties  as  may  be  deemed  necessary,  and  for  failure  to  give 
such  bond  when  required,  or  for  failure  to  properly  perform  his 
duties  in  the  premises,  the  court  may  appoint  some  other  person 
to  take  charge  of  said  estate,  such  person  having  at  first  given  bond 
as  aforesaid.  A  record  shall  be  kept  by  the  clerk  of  said  court  of 
all  proceedings  in  respect  of  any  suchestate  under  the  provisions 
hereof. 

Sec.  3.  That  appeals  shall  lie  from  all  final  judgments  or 
decrees  of  said  court  of  the  United  States  circuit  court  of  appeals 
of  the  ninth  judicial  circuit,  and  thence  appeals  and  writs  of  error 
may  be  taken  from  the  judgments  or  decrees  of  the  said  circuit 
court  of  appeals  to  the  Supreme  Court  of  the  United  States  in  the 


EXTEATEERITOEIALITY  99 

same  class  of  cases  as  those  in  whioh  appeals  and  writs  of  error 
are  permitted  to  judgments  of  said  court  of  appeals  in  cases  com- 
ing from  district  and  circuit  courts  of  the  United  States.  Said 
appeals  or  writs  of  error  shall  be  regulated  by  the  procedure  gov- 
erning appeals  within  the  United  States  from  the  district  courts 
to  the  circuit  courts  of  appeal,  and  from  the  circuit  courts  of 
appeal  to  the  Supreme  Court  of  the  United  States,  respectively, 
so  far  as  the  same  shall  be  applicable ;  and  said  courts  are  hereby 
empowered  to  hear  and  determine  appeals  and  writs  of  error  so 
taken. 

Sec.  4.  The  jurisdiction  of  said  United  States  court,  both  ori- 
ginal and  on  appeal,  in  civil  and  criminal  matters,  and  also  the 
jurisdiction  of  the  consular  courts  in  China,  shall  in  all  cases  be 
exercised  in  conformity  with  said  treaties  and  the  laws  of  the 
United  States  now  in  force  in  reference  to  the  American  consular 
courts  in  China,  and  all  judgments  and  decisions  of  said  consular 
courts,  and  all  decisions,  judgments,  and  decrees  of  said  United 
States  court,  shall  be  enforced  in  accordance  with  said  treaties 
and  laws.  But  in  all  such  cases  when  such  laws  are  deficient  in 
the  provisions  necessary  to  give  jurisdiction  or  to  furnish  suitable 
remedies,  the  common  law  and  the  law  as  established  by  the  deci- 
sions of  the  courts  of  the  United  States  shall  foe  applied  by  said 
court  in  its  decisions  and  shall  govern  the  same  subject  to  the 
terms  of  any  treaties  between  the  United  States  and  China. 

Sec.  5.  That  the  procedure  of  the  said  court  shall  be  in  accord- 
ance, so  far  as  practicable,  with  the  existing  procedure  prescribed 
for  consular  courts  in  China  in  accordance  with  the  Revised  Sta- 
tutes of  the  United  States :  Provided^  however.  That  the  judge  of 
the  said  United  States  court  for  China  shall  have  authority  from 
time  to  time,  to  modify  and  supplement  said  rules  of  procedure. 
The  provisions  of  sections  forty-one  hundred  and  six  and  forty-one 
hundred  and  seven  of  the  Revised  Statutes  of  the  United  States 
allowing  consuls  "in  certain  cases  to  summon  associates  shall  have 
no  application  to  said  court. 

Sec.  6.  There  shall  be  a  district  attorney,  a  marshal,  and  a 
clerk  of  said  court,  with  authority  possessed  by  the  corresponding 
officers  of  the  district  courts  in  the  United  States  as  far  as  may  be 


100      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

consistent  with  the  conditions  of  the  laws  of  the  United  States  and 
said  treaties.  The  judge  of  said  court  and  the  district  attorney, 
who  shall  be  lawyers  of  good  standing  and  experience,  marshal, 
and  clerk  shall  be  appointed  by  the  President,  by  and  with  the 
advice  and  consent  of  the  Senate,  and  shall  receive  as  salary,  re- 
spectively, the  sums  of  eight  thousand  dollars  per  annum  for  said 
judge,  four  thousand  dollars  per  annum  for  said  district  attorney, 
three  thousand  dollars  per  annum  for  said  marshal,  and  three 
thousand  dollars  per  annum  for  said  clerk.  The  judge  of  the  said 
court  and  the  district  attorneys  shall,  when  the  sessions  of  the  court 
are  held  at  oiJher  cities  than  Shanghai,  receive  in  addition  to  their 
salaries  their  necessary  expenses  during  such  sessions  not  to  exceed 
ten  dollars  per  day  for  the  judge  and  five  dollars  per  day  for  the 
district  attorney. 

Sec.  7.  The  tenure  of  oflBce  of  the  judge  of  said  court  shall  be 
ten  years,  unless  sooner  removed  by  the  President  for  cause;  the 
tenure  of  oflBce  of  the  other  officials  of  the  court  shall  be  at  the 
pleasure  of  the  President. 

Sec.  8.  The  marshal  and  the  clerk  of  said  court  shall  be  re- 
quired to  furnish  bond  for  the  faithful  performance  of  their  duties, 
in  sums  and  with  sureties  to  be  fixed  and  approved  by  the  judge  of 
the  court.  They  shall  each  appoint,  with  the  written  approval  of 
said  judge,  deputies  at  Canton  and  Tientsin,  who  shall  also  be 
required  to  furnish  bonds  for  the  faithful  performance  of  their 
duties,  which  bonds  shall  be  subject,  both  as  to  form  and  sufficiency 
of  the  sureties,  to  the  approval  of  the  said  judge.  Such  deputies 
shall  receive  compensation  at  the  rate  of  five  dollars  for  each  day 
the  sessions  of  the  court  are  held  at  their  respective  cities.  The 
office  of  marshal  in  China  now  existing  in  pursuance  of  section 
forty-one  hundred  and  eleven  of  the  Revised  Statutes  is  hereby 
abolished. 

Sec.  9.  The  tariff  of  fees  of  said  officers  of  the  court  shall  be 
the  same  as  the  tariff  already  fixed  for  the  consular  courts  in 
China,  subject  to  amendment  from  time  to  time  by  order  of  the 
President,  and  aU  fees  taxed  and  received  shall  be  paid  into  the 
Treasury  of  the  United  States. 

Approved,  June  30,  1906. 


EXTRATEREITORIALITY  101 

MacMurray  (Appendix  D)  adds  the  following  note: 

In  reference  to  the  effect  of  the  Act  establishing  the  United 
States  Court  for  China  upon  previous  legislation  regarding  the 
exercise  of  extraterritorial  jurisdiction  by  American  Consular  Offi- 
cers acting  judicially  under  regulations  and  rules  of  procedure 
prescribed  by  the  American  Minister,  the  Department  of  State  had 
occasion  to  instruct  the  Legation  at  Peking,  under  date  of  March 
2,  1917,  as  follows: 

"  You  are  informed  that  in  the  opinion  of  the  Department,  the 
provisions  of  section  4106  and  4107  of  the  Revised  Statutes,  giving 
authority  to  the  Minister  to  approve  the  list  of  associates  sum- 
moned by  consuls  to  sit  with  them  in  the  trial  of  certain  cases,  are 
not  abrogated  by  later  legislation,  including  the  Act  of  Congress 
of  June  30,  1906,  creating  the  United  States  Court  for  China  and 
prescribing  the  jurisdiction  thereof. 

"  With  respect  to  the  provisions  of  the  Statutes  giving  authority 
to  the  Minister  to  make  regulations  regarding  the  rules  of  pro- 
cedure applicable  to  the  consular  courts,  you  are  advised  that  the 
Department  is  clearly  of  the  opinion  that  Section  5  of  the  Act  of 
June  30,  1906,  should  be  construed  as  effecting  a  transfer  of  the 
authority  to  modify  and  supplement  existing  rules  of  procedure 
from  the  Minister  to  the  United  States  Court  for  China. 

"  You  are  further  informed  that  the  Department  considers  that 
the  power  conferred  upon  the  Minister  by  Section  4086  of  the 
Revised  Statutes,  to  make  regulations  concerning  remedial  rights, 
is  not  revoked  or  transferred  by  the  provisions  of  the  Act  creating 
the  United  States  Court  or  by  other  legislation.  However,  in  view 
of  the  fact  that,  according  to  the  Department's  information,  under 
the  holdings  and  decisions  of  the  United  States  Court  for  China  in 
construction  of  the  authority  vested  in  it  and  in  the  consular 
courts,  American  citizens  in  China  are  supplied  with  remedial 
rights  to  an  extent  apparently  quite  ample  and  in  view  also  of  the 
narrow  construction  which  has  heretofore  been  placed  upon  the 
authority  of  the  Minister,  derived  from  the  provisions  of  Section 
4086  of  the  Revised  Statutes,  with  respect  to  the  making  of  regu- 
lations concerning  remedial  rights,  it  would  seem  that  there  would 
be  little,  if  any,  occasion  for  the  Minister  to  exercise  such 
authority." 


CHAPTEE  ni 

fobeign  commebcb  and  the  rights  op  foeeign 
Mebchants  in  China 


Foreign  trade  with  China,  both  by  sea  and  over  land, 
dates  from  very  early  days,  but,  as  we  have  already  seen, 
not  until  1842  was  any  agreement  obtained  from  the 
Government  at  Peking  placing  this  trade  upon  a  definite 
basis,  fixing  the  customs  charges,  export  and  import 
which  might  be  exacted,  and  defining  the  legal  or  treaty 
rights  which  foreign  merchants  should  enjoy  in  the  ports 
at  which  they  were  permitted  to  trade.  ^ 

As  early  as  1793  Great  Britain  had  sent  to  China  the 
Lord  MacCartney  mission  to  secure,  if  possible,  better 
trading  relations  between  the  two  countries;  and  again, 
in  1816,  for  the  same  purpose  sent  LfOrd  Amherst.  Both 
missions,  however,  failed  to  realize  their  aim.  Indeed, 
Lord  Amherst  failed  even  to  obtain  an  audience  with  the 
Emperor.  Li  1842,  however,  in  the  Treaty  of  NanMng, 
which  concluded  the  so-called  Opium  War,  the  Chinese 
Government  was  compelled,  for  the  first  time,  to  give 
express  sanction  to  foreign  trade  at  certain  ports,  to  fix 
the  conditions  under  which  this  trade  should  be  carried 
on,  and  to  give  to  British  traders  certain  rights  of  resi- 
dence in  the  Empire — all  of  which  regulations  and  rights 
were  immediately  made  applicable  to  the  traders  of  the 

^  Prior  to  this  time  China  haxi  entered  into  treaties  with  Russia  dealing 
with  boundaries  and  overland  trade,  but  these  agreements  had  been  limited 
in  scope  and  had  made  no  attempt  to  give  to  traders  a  definite  l^al  status 
in  the  ports  of  the  Empire. 

102 


FOEEIGN  COMMEECE  103 

other  **  Treaty  Powers,"  that  is,  of  those  Powers  with 
which  China  then  or  later  had  treaty  relations. 

Treaty  of  Nanking,  1842.  This  treaty  of  August  29, 
1842,  signed  at  Nanking,  is  of  importance  not  simply  as  a 
commercial  agreement,  but  as  containing  features  which, 
fiiQce  that  time,  have  characterized  the  general  rights  of 
foreigners  resident  in  China: — ^the  establishment  of 
**  treaty  ports,"  the  creation  of  residential  **  settle- 
ments "  or  "  concessions  "  at  these  ports,  the  granting 
of  extraterritorial  rights  to  foreigners,  and  the  imposi- 
tion by  treaties  of  limitations  upon  the  freedom  of  China 
to  fix  customs  dues  according  to  her  own  fiscal  needs  or 
domestic  commercial  policy.^  It  will  therefore  be  appro- 
priate to  consider  this  treaty  with  some  degree  of  par- 
ticularity. 

By  the  treaty  of  Nanking  the  island  of  Hongkong 
was  ceded  to  Great  Britain  and  the  five  ports  of  Canton, 
Amoy,  Foochow,  Ningpo,  and  Shanghai  were  formally 
opened  to  foreign  trade.  In  these  **  Treaty  Ports  "  it 
was  provided  that  merchants  might  reside  and  carry  on 
trade,  and  for  these  purposes  build  dwellings  and  ware- 
houses, and  it  was  agreed  that  consular  oflBcials  should 
be  appointed  to  act  as  the  medium  of  communication 
between  the  foreign  merchants  and  the  Chinese  authori- 
ties. It  was  also  provided  that  the  Chinese  Government 
should  establish  and  publish  a  schedule  of  customs  duties 
to  take  the  place  of  the  previously  uncertain  amounts  that 
had  been  levied  upon  imports  and  exports.  And,  in  con- 
nection with  this  last  undertaking,  the  important  fact  is 

*The  era  of  railway  and  other  concessions,  and  the  establishment  of 
spheres  of  interest  did  not  oome  until  forty  or  fifty  years  later.  See  post, 
Chapter  XX. 


104      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  be  noted  tliat  it  was  understood  that  the  customs  duties 
thus  fixed  should  not  be  increased  beyond  the  amounts 
then  agreed  upon.  This  principle  was  continued  in  later 
treaties,  and  thus,  improvidently — for  the  Chinese  Gov- 
ernment did  not  then  see  the  seriousness  of  the  step  nor 
obtain  any  real  quid  pro  quo  for  the  engagement  upon 
her  part — ^China  has  since  been  unable  to  exercise  the 
right  of  determining  the  rates  of  her  own  export  and 
import  dues.  In  this  respect  China  is  unique  among  the 
great  Powers  of  the  world.^  It  is  true  that  the  Western 
Powers  have  been  accustomed  to  enter  into  special  com- 
mercial treaties  regulating  trade  between  the  contracting 
parties,  but  in  few,  if  any,  cases  have  these  treaties  fixed 
the  absolute  rates  that  might  be  charged  upon  all  exports 
or  imports.  Their  purpose  has  been  to  grant  certain 
reciprocal  privileges  as  regards  maximum  and  minimum 
rates  in  general,  or  to  determine  the  conditions  under 
which  specific  articles  may  be  exported  or  imported.  The 
fiscal  limitations  under  which  China  has  suffered  since 
1842  have  thus  differed  from  those  created  by  commercial 
treaties  between  the  Western  Powers  in  the  two  impor- 
tant respects  that,  first,  they  have  fixed  a  very  low  rate 
which  has  applied  to  all  articles  of  export  or  import,^  and 
second,  these  limitations  having  been  granted  to  all  the 
Treaty  Powers,  China  finds  herself  in  the  situation  that 
she  cannot  get  rid  of  them  or  lessen  their  severity  unless 
she  can  obtain  the  unanimous  consent  of  all  these  Treaty 
Powers,  and  this,  up  to  the  present  time,  she  has  been 

*  Japan  long  suflFered  under  the  same  treaty  restriction.  She,  in  turn, 
imposed  the  same  restriction  upon  Korea.  Siam  is  still  subject  to  similar 
restrictions,  as  is  also  Turkey  in  a  measure. 

*  There  has  also  been  a  free  list  of  commodities  upon  which  no  duties 
can  be  levied. 


FOREIGN  COMMERCE  105 

unable  to  obtain.  Indeed,  as  will  later  be  pointed  out, 
Cbina  has  not  been  able  to  levy  during  tbe  recent  years 
even  the  effective  5  per  cent,  ad  valorem  duties  which  her 
treaties  profess  to  allow  her  to  do. 

The  following  provisions  of  the  Nanking  Treaty  are 
of  sufficient  importance  to  warrant  their  textual  repro- 
duction : 

Article  II.  His  Majesty,  the  Emperor  of  China,  agrees  that 
British  subjects,  with  their  families  and  establishments,  shaU  be 
allowed  to  reside,  for  the  purpose  of  carrying  on  their  mercantile 
pursuits,  without  molestation  or  restraint,  at  the  cities  and  towns 
of  Canton,  Amoy,  Foochowfoo,  Ningpo,  and  Shanghai;  and  Her 
Majesty  the  Queen  of  Great  Britain,  etc.,  will  appoint  superintend- 
ents, or  consular  officers,  to  reside  at  each  of  the  above  named  cities 
or  towns,  to  be  the  medium  of  communication  between  the  Chinese 
authorities  and  the  said  merchants,  and  to  see  that  just  duties  and 
other  dues  of  the  Chinese  Government,  as  hereafter  provided  for, 
are  duly  discharged  by  Her  Britannic  Majesty's  subjects. 

Article  V.  The  Government  of  China  having  compelled  the 
British  merchants  trading  at  Canton  to  deal  exclusively  with  cer- 
tain Chinese  merchants  called  Hong  Merchants  (or  Co-Hong)  who 
had  been  licensed  by  the  Chinese  Government  for  that  purpose,  the 
Emperor  of  China  agrees  to  abolish  that  practice  in  future  at  all 
ports  where  British  merchants  may  reside,  and  to  permit  them  to 
carry  on  their  mercantile  transactions  with  whatever  persons  they 
please. 

Article  X.  His  Majesty  the  Emperor  of  China  agrees  to  estab- 
lish at  the  ports  which  are  by  the  second  Article  of  the  Treaty  to  be 
thrown  open  for  the  resort  of  British  merchants,  a  fair  and  regular 
tariff  of  export  and  import  customs  and  other  dues,  which  tariff 
shall  be  publicly  notified  and  promulgated  for  general  information ; 
and  the  Emperor  further  engages,  that  when  British  merchandise 
shall  have  once  paid  at  any  of  the  said  ports  the  regulated  customs 
and  dues  agreeable  to  the  tariff,  to  be  hereafter  fixed,  such  merchan- 
dise may  be  conveyed  by  Chinese  merchants  to  any  province  or  city 


106      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

in  the  interior  of  the  Empire  of  China,  on  paying  a  further  amount 

afi  transit  duties,  which  shall  not  exceed per  cent,  on  the 

tariff  value  of  such  goods." 

It  will  be  seen  from  the  provisions  thus  given  that  the 
Treaty  of  1842  did  not  itself  fix  the  duties  that  the 
Chinese  Government  might  collect.  This  was  done  by  a 
**  Declaration  *'  issued  by  the  Chinese  Government  June 
26, 1843. 

By  a  supplementary  treaty  with  Great  Britain,  signed 
October  8, 1843,  the  rights  of  foreign  traders  were  further 
defined.  The  more  important  of  the  provisions  of  this 
agreement  were  as  follows : 

Abticle  IV.  After  the  five  ports  of  Canton,  Foochowfoo,  Amoy, 
Ningpo,  and  Shanghai,  shall  be  thrown  open,  English  merchants 
fihaU  be  allowed  to  trade  only  at  those  five  ports.  Neither  shall  they 
repair  to  any  other  ports  or  places,  nor  will  the  Chinese  people  at 
any  other  ports  or  places  be  permitted  to  trade  with  them. 

Aeticle  YI.  It  is  agreed  that  English  merchants  and  others 
residing  at,  or  resorting  to,  the  five  ports  to  be  opened,  shall  not  go 
into  the  surrounding  country  beyond  certain  short  distances  to  be 
named  by  the  local  authorities,  in  concert  with  the  British  consul, 
and  on  no  pretence  for  purposes  of  trafiBc. 

Article  VIII.  The  Emperor  of  China  having  been  graciously 
pleased  to  grant  to  all  foreign  countries  whose  subjects  or  citizens 
have  hitherto  traded  at  Canton,  the  privilege  of  resorting  for  pur- 
poses of  trade  to  the  other  four  ports  of  Foochowfoo,  Amoy,  Ningpo, 
and  Shanghai,  on  the  same  terms  as  the  Enghsh,  it  is  further 
agreed,  that  should  the  Emperor  hereafter,  from  any  cause  what- 
ever, be  pleased  to  grant  additional  privileges,  or  immunities,  to 
any  of  the  subjects  or  citizens  of  such  foreign  countries,  the  same 
privileges  and  immunities  will  be  extended  to,  and  enjoyed  by, 
British  subjects;  but  it  is  to  be  understood,  that  demands  or  re- 
quests are  not,  on  this  plea,  to  be  unnecessarily  brought  forward. 

*  Customs  Treaties,  i,  p.  362. 


FOEEIGN  COMMERCE  107 

This  last  article  is,  of  course,  the  familiar  most  favored 
nation  clause.  It  is  to  be  noted  that  the  provision  is  uni- 
lateral, that  is,  not  China,  but  only  Great  Britain  is  to 
benefit  by  it. 

The  Treaty  of  Nanking  gave  to  foreign  trade  a  definite 
legal  standing  in  China,  but  by  no  means  marked  an  end 
to  the  conflicts  which  had  previously  existed  between 
foreign  traders  and  the  Chinese  authorities.  Since  that 
time  questions  concerning  foreign  commerce  have  related 
to  the  following  matters:  (a)  the  opening  up  of  new 
"  Treaty  Ports  ";  (h)  the  revision  of  tariff  schedules; 
(c)  the  regulation  of  transit  and  other  charges  upon  com- 
modities after  importation,  or  upon  commodities  pro- 
ceeding to  the  ports  for  exportation;  (d)  the  granting  of 
additional  rights  and  privileges  to  traders  resident  in 
China;  (e)  the  creation  of  an  efficient  maritime  customs 
administrative  service;  and  (/)  the  maintenance  of  the 
so-called  "  Open  Door  '*  policy  according  to  which,  sub- 
ject to  certain  exceptions  later  to  be  mentioned,  no 
Treaty  Power  is  to  enjoy  commercial  rights  not  granted 
by  the  Government  of  China  to  the  citizens  of  the  other 
Treaty  Powers.  It  will  not  be  feasible  to  give  a  wholly 
separate  consideration  to  each  of  these  subjects,  but  they 
need  to  be  borne  in  mind. 

Tientsin  Treaties  of  1858.  The  year  1858  marks  a  sec- 
ond definite  stage  in  the  development  of  the  relations  of 
China  with  the  other  Powers.  As  a  result  of  military 
operations  upon  the  part  of  the  Powers,  and  a  good  deal 
of  negotiating,  there  were  signed  in  that  year  substan- 
tially similar  treaties — ^the  so-called  Tientsin  Treaties — 
with  Great  Britain,  the  United  States,  France,  and  Bus- 


108      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

sia.  By  these  agreements  the  older  treaties  were  re- 
vised, the  trade  in  opium  subjected  to  new  regulations, 
the  Yangtze  Eiver  opened  up  to  navigation  by  foreign 
vessels,  new  treaty  ports  created,  travel  and  trade  in  the 
interior  made  more  secure  by  a  system  of  passports,  a 
new  schedule  of  customs  duties  agreed  ujwn,  Christian 
missionaries  in  China  given  wider  rights  of  residence 
and  of  propaganda,  and  the  right  granted  by  the  Chinese 
Government  to  the  diplomatic  agents  of  the  Treaty  Pow- 
ers to  come  to  and  reside  in  Peking.  This  last  privilege 
the  foreign  nations  had  been  seeking  to  obtain  since  1842. 
It  was  also  expressly  provided  that  foreign  diploma/tic 
officials  should  be  treated  with  courtesy  and  considera- 
tion, that  they  should  not  be  compelled  to  perform  any 
ceremonies  of  an  undignified  or  humiliating  character, 
that  their  correspondence  should  not  be  interfered  with, 
and  that  they  should  have  direct  relations  with  a  high 
minister  of  state  at  Peking.  These  diplomatic  rights 
were  made  effective  in  the  treaties  of  1860  which  con- 
cluded the  war  with  China  caused  by  the  obstruction 
which  the  Chinese  Government  had  interposed  to  the 
ratification  at  Peking  of  the  Tientsin  treaties. 

Treaties  of  1902  and  1903.  In  1902  and  1903  one  more 
effort  was  made  by  China,  cooperating  with  Great  Bri- 
tain, the  United  States  and  Japan,  to  place  upon  a  more 
satisfactory  basis  many  of  the  existing  conditions  relat- 
ing to  trade,  finance,  currency,  mining,  joint-stock  enter- 
prises, trade-marks,  patents,  inland  navigation,  reform 
of  the  Chinese  judiciary  and  law  as  a  preparation  for  the 
abolition  of  extraterritoriality,  the  status  of  mission- 
aries, etc.     The  reciprocal  undertakings  were  embodied 


FOEEIGN  COMMERCE  109 

in  the  so-called  Mackay  Treaty  of  1902  between  China 
and  Great  Britain  and  the  treaties  of  1903  between  China 
and  the  United  States  and  Japan,  respectively.  Many 
of  the  provisions  of  these  treaties  have  never  come  into 
force.  This  has  been  due  in  part  to  the  failure  to  secure 
for  them  the  necessary  consent  of  the  Treaty  Powers; 
and  in  part  to  the  failure  of  China  to  effect  the  reforms 
which  were  called  for.^  Notwithstanding  this  fact  it  is 
important  to  consider  the  provisions  of  these  treaties 
since  they  indicate,  in  a  very  clear  manner,  the  lines 
along  which,  in  the  future,  it  may  be  practicable  for 
foreign  nations  to  cooperate  with  China  for  the  improve- 
ment of  present  commercial,  financial,  and  administra- 
tive conditions  in  China. 


•Sections  14  and  15  of  Article  VIII  of  the  Mackay  Treaty  provided  as 
follows : 

"  Section  14.  The  condition  on  which  the  Chinese  Government  enter 
into  the  present  engagement  is  that  all  Powers  entitled  to  most  favored 
nation  treatment  in  China  enter  into  the  same  engagements  as  Great 
Britain  with  regard  to  the  payment  of  surtaxes  and  other  obligations 
imposed  by  this  article  on  His  Britannic  Majesty's  Government  and 
subjects. 

"The  conditions  on  which  His  Britannic  Majesty's  Government  enter 
into  the  present  engagement  are: 

"  (1)  That  all  Powers  who  are  now  or  who  may  hereafter  become  en- 
titled to  most  favored  nation  treatment  in  China  enter  into  the  same 
engagements ; 

"  (2)  And  that  their  assent  is  neither  directly  nor  indirectly  made 
dependent  on  the  granting  by  China  of  any  political  concession,  or  of  any 
exclusive  conmaercial  concession. 

"Section  15.  Should  the  Powers  entitled  to  most  favored  nation  treat- 
ment by  China  have  failed  to  agree  to  enter  into  the  engagements  under- 
taken by  Great  Britain  under  this  article  by  the  Ist  of  January,  1904, 
then  the  provisions  of  the  article  shall  only  come  into  force  when  all  the 
Powers  have  signified  their  acceptance  of  these  engagements"  [i.  e.,  all 
the  Treaty  Powers,  whether  entitled  to  most  favored  nation  treatment 
or  not].    Customs  Treaties,  i,  p.  554.    MacMurray,  No.  1902/7. 


110      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Specific  Rights  of  Foreign   Merchants  in   China.     By 

the  Nanking  Treaty,  as  will  be  remembered,  foreign  mer- 
chants were  given  the  right  to  reside  and  carry  on  trade 
at  the  designated  Treaty  Ports,  and  for  these  purposes 
to  build  dwellings  and  warehouses.  By  the  Supplemen- 
tary Treaty  of  the  next  year  it  was  expressly  declared 
that  these  merchants  might  not  trade  at  or  resort  to  any 
other  places,  nor  even  go  beyond  certain  distances,  to  be 
agreed  upon  outside  of  these  ports. 

By  Article  XTTT  of  the  "  General  Eegulations  "  issued 
in  1843  in  pursuance  of  the  Nanking  Treaty,  it  was  fur- 
ther provided,  in  rather  general  and  unprecise  language, 
that  foreign  merchants  in  the  Ports  should  enjoy  extra- 
territorial rights."^  By  the  Treaty  of  Tientsin  of  1858 
the  rights  of  aliens  in  China  were  further  broadened  by 
the  provision  that  they  might  be  **  permitted  to  travel 
for  pleasure  or  trade  to  all  parts  of  the  interior,  under 
passports  issued  by  their  consuls  and  countersigned  by 
local  authorities. ' '  ^ 

By  the  Shimonoseki  Treaty  of  1895,  dictated  to  China 
by  victorious  Japan  at  the  end  of  the  Sino-Japanese 
War,  not  only  were  new  Treaty  Ports  opened  up  to  trade, 
and  steam  navigation  for  vessels  for  the  conveyance  of 
passengers  and  cargoes  in  the  upper  Yangtse,  on  the 
Woosung  Eiver  and  the  Grand  Canal  from  Shanghai  to 
Soochow  and  Hangchow  permitted,  but  the  general 
rights    of   trading   in    China    considerably   broadened. 

'  See  ante,  Chapter  I,  "  Extraterritoriality." 

"The  rights  enjoyed  by  traders  as  well  as  other  aliens  resident  in  the 
so-called  "  Settlements  "  or  "  Concessions  "  created  in  certain  of  the  Treaty 
Ports  have  received  some  consideration  in  connection  with  the  general 
subject  of  Extraterritoriality.  They  will  further  be  discussed  in  the  sec- 
tions dealing  with  "  Settlements  "  and  "  Concessions." 


FOEBIGN  COMMEECE  111 

Thus,  among  its  other  provisions,  the  Treaty,  by  Article 
VI,  declared :  ^ 

Japanese  subjects  purchasing  goods  or  produce  in  the  interior  of 
China  or  transporting  imported  merchandise  into  the  interior  of 
China,  shall  have  the  right  temporarily  to  rent  or  hire  warehouses 
for  the  storage  of  the  articles  so  purchased  or  transported,  without 
the  payment  of  any  taxes  or  exactions  whatever. 

Japanese  subjects  shall  be  free  to  engage  in  all  kinds  of  manufac- 
turing industries  in  all  the  open  cities,  towns,  and  ports  of  China, 
and  shall  be  at  Hberty  to  import  into  China  all  kinds  of  machinery 
paying  only  the  stipulated  duties  thereon. 

,  All  articles  manufactured  by  Japanese  subjects  in  China  shall, 
in  respect  of  inland  transit  and  internal  taxes,  duties,  charges  and 
exactions  of  all  kinds,  and  also  in  respect  of  warehousing  and  stor- 
age facilities  in  the  interior  of  China,  stand  upon  the  same  footing 
and  enjoy  the  same  privileges  and  exemptions  as  merchandise  im- 
portdd  by  Japanese  subjects  into  China. 

In  the  event  additional  rules  and  regulations  are  necessary  in 
connection  with  these  concessions,  they  shall  be  embodied  in  the 
Treaty  of  Commerce  and  Navigation  provided  for  by  this  Article.^' 

In  accordance  with  the  iindertaking  contained  in  the 
Treaty  of  ShimonoseM,  China  signed  with  Japan  the  next 
year  (1896)  a  treaty  in  which  the  rights  of  Japanese 
traders  in  the  matter  of  commerce  and  navigation  were 
set  forth  in  detail. 

The  treaty  of  ShimonoseM  is  also  of  importance  with 
regard  to  matters  of  finance  since  the  indemnity  of 
two  hundred  million  taels,  later  increased  by  thirty  mil- 
lion taels  when  the  Liaotung  peninsula  was  retroceded, 
which  China  undertook  to  pay  to  her  victorious  foe, 

•The  rights  granted  to  the  Japanese  by  operation  of  the  most  favored 
nation  clause,  contained  in  the  treaties  between  China  and  the  other  Pow- 
ers, became  immediately  available  to  the  nationals  of  those  powers. 

"  Customs  Treaties,  n,  p.  594.     MaoMurray,  No.  1895/3. 


112      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

necessitated  two  Anglo-German  loans  of  £16,000,000  each 
in  1896  and  1898,  loans  for  which  a  lien  upon  the  pro- 
ceeds of  the  salt  tax  and  the  likin,  under  the  control  of 
the  Inspector-General  of  Maritime  Customs,  had  to  be 
given  as  security.  It  was  in  connection  with  the  second 
of  these  loans  that  China  had  to  give  the  pledge  that  so 
long  as  Great  Britain  should  have  a  preponderance  of 
trade  with  China  above  that  of  any  other  country, 
the  Inspector-General  should  be  an  Englishman.  This 
pledge  was  again  confirmed  in  May,  1908. 

As  a  result  of  the  huge  indemnities  which  she  was 
called  upon  to  pay  under  the  Boxer  Protocol  of  1901, 
China  was  obliged  stiU  further  to  mortgage  her  ordinary 
and  regular  revenues.  As  security  for  interest  charges 
and  periodical  payments  thus  undertaken  to  be  made, 
the  balance  of  the  maritime  customs  together  with  the 
native  customs,^^  and  the  salt  tax  or  "  gabelle  "  were 
pledged,  in  so  far  as  these  revenues  were  not  already 
pledged  for  the  payment  of  other  foreign  loans. 

Treaty  Ports.  It  still  remains  true  that  goods  may  be 
exported  from  or  imported  into  China  only  from  or  to 
such  places  as  have  been  designated  for  the  purpose  by 
the  Chinese  government.  These  places  now  number 
some  seventy-five  and  are  known  as  **  Open "  or 
"  Treaty  Ports."  The  latter  term  is,  however,  some- 
what misleading  since,  in  the  case  of  a  number  of  them, 
the  opening  has  been  by  imperial  decree,  voluntary  upon 
the  part  of  China  and  not  required  as  a  matter  of  treaty 
obligation.  Furthermore,  in  a  considerable  number  of 
cases  the  *'  Ports  "  are  not  upon  the  seaboard  or  even 

"  To  be  administered  in  the  open  ports  by  the  maritime  customs  service. 


FOREIGN  COMMERCE  113 

upon  rivers  navigable  by  ocean-going  steamers,  but  are 
located  far  in  the  interior  of  China.  Since  the  Sino- 
Japanese  Treaty  of  1915,  foreigners  have  throughout 
South  Manchuria  many  of  the  rights  which  elsewhere  in 
China  they  have  only  in  the  Treaty  Ports.  Article  3  of 
that  agreement  reads :  **  Japanese  subjects  shall  be  free  to 
reside  and  travel  in  South  Manchuria  and  to  engage  in 
business  and  manufacture  of  any  kind  whatsoever.'* 
These  rights  of  course  have  attached  to  the  nationals  of 
all  the  other  treaty  powers  by  operation  of  the  most 
favored  nation  clause. 

As  to  the  significance  of  Treaty  Ports  the  following 
quotation  from  Morse  is  illuminating.^^ 

At  these  ports  foreign  nations  are  privileged  to  estabhsh  con- 
sulates, foreign  merchants  are  permitted  to  live  and  trade,  and  on 
the  trade  at  these  ports  are  levied  dues  and  duties  according  to  a 
tariff  settled  by  both  parties  by  treaty.  At  some  ports  are  national 
concessions,  as  at  Tientsin,  in  which  municipal  and  pohce  adminis- 
tration is  under  the  control  of  the  consul  of  the  lessee  power;  at 
others  are  settlements  or  reserved  areas  for  residence,  as  at  Shang- 
hai, with  municipal  organization  but  at  which  the  power  which 
issues  the  title  deeds  is  China;  at  others,  including  most  of  the 
newer  ports,  there  is  neither  concession  nor  reserved  area,  excepting 
"International  settlements''  established  at  a  few  places  by  the 
Chinese  authorities.  At  all  the  treaty  ports,  however,  there  is  one 
common  right,  the  privilege  of  exempting  goods  by  one  payment 
from  all  further  taxation  on  movement.  On  a  bale  of  sheetings 
imported  at  Shanghai,  a  treaty  port,  the  importer  will  pay  once 
duty  at  the  tariff  rate ;  it  may  then,  perhaps  a  year  later,  be  shipped 
to  Hankow,  a  treaty  port,  without  further  payment;  it  may  then 
be  shipped  to  Ichang,  a  treaty  port,  without  further  payment;  it 
may  then  be  shipped  to  Chung-king,  having  the  privileges  of  a 
treaty  port,  without  further  payment;  but  if  it  then  goes  on  fifty 

*'Tr<ide  and  Adminiatration  of  CMna,  p.  208. 
8 


114      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

miles  farther,  or  if,  instead  of  taking  the  journey  of  1,400  miles 
in  three  stages  to  Chung-king,  it  goes  "  inland  "  to  a  place  which 
is  not  a  treaty  port,  thirty  miles  from  Shanghai,  the  bale  is  liable 
to  the  taxation  which  is  levied  in  China  on  all  movement  of  com- 
modities not  exempted  by  special  privilege.  A  treaty  port  may  be 
miles  away  from  the  nearest  navigable  water,  it  may  be  the  most 
inland  of  inland  marts,  but  in  matters  of  taxation  and  of  privilege 
a  broad  distinction  is  drawn  between  these  forty  ports  and  all  the 
rest  of  China,  which,  even  on  the  coast,  is  "  inland/'  This  is  the 
one  reason  underlying  the  constant  demand  for  the  opening  of  new 
treaty  ports,  with  all  the  expense  for  administrative  and  preventive 
work  imposed  on  China,  and  for  the  enforcement  of  extraterritorial 
rights  imposed  on  the  foreign  powers. 

As  regards  the  ports  voluntarily  opened  by  China  it  is 
to  be  observed  that  resident  traders  in  them  do  not  neces- 
sarily enjoy  all  the  rights  and  privileges  which,  by 
treaty,  they  have  been  given  in  the  other  strictly  so^ 
called  *'  Treaty  Ports.**  The  Chinese  Government  in- 
deed has  attempted  to  exercise  the  right  to  levy  customs 
dues  at  these  voluntarily  opened  ports  differing  from 
those  which  she  is  compelled  to  levy  at  the  ports  opened 
in  pursuance  of  treaty  engagements.  This  right  has, 
however,  been  successfully  resisted  by  the  Treaty  Pow- 
ers.^* 

The  status  and  methods  of  governing  the  foreign 
**  Settlements  "  or  '*  Concessions  "  at  the  Treaty  Ports, 
i.  e.,  the  areas  marked  off  in  which  foreigners  may  reside 
and  do  business,  are  discussed  elsewhere.  It  may  be  here 
observed,  however,  that  the  chief  political  characteristic 
which  distinguishes  these  voluntarily  opened  ports  from 
those  treaty  ports  in  which  foreign  **  concessions  "  or 
**  settlements  '*  exist  is  that  municipal  administration 

"  See  Koo,  The  Status  of  Aliens  in  China,  pp.  250-252. 


FOREIGN  COMMERCE  115 

and  police  control  remain  exclusively  in  the  hands  of  the 
local  Chinese  officials.^^ 

Ports  of  Call.  In  addition  to  the  Treaty  Ports  there 
are  in  China  a  number  of  places  known  as  *'  ports  of 
call  "  at  which  foreign  steamers  are  permitted  to  stop 
for  the  purpose  of  landing  or  taking  on  passengers,  and, 
under  certain  restrictions,  of  goods  as  well.  For  ex- 
ample, the  Chef 00  convention  of  1876  with  Great  Britain 
designates  six  places  on  the  Yangtze  Eiver  at  which, 
though  not  Treaty  Ports,  * '  steamers  shall  be  allowed  to 
touch  for  the  purpose  of  landing  or  shipping  passengers 
or  goods ;  but  in  aU  cases  by  means  of  native  boats  only, 
and  subject  to  the  regulations  in  force  affecting  native 
trade"  It  is  also  provided  that  **  produce  accompanied 
by  a  half -duty  certificate  may  be  shipped  at  such  points 
by  the  steamers,  but  may  not  be  landed  by  them  for 
sale."  Also  it  is  expressly  stated  that  **  foreign  mer- 
chants will  not  be  authorized  to  reside  or  open  houses  of 
business  or  warehouses  at  the  places  enumerated  as  ports 
of  call." 

Limits  of  Treaty  Ports.  With  regard  to  the  territo- 
rial limits  of  Treaty  Ports  none  of  the  treaties  are 
definite  and  this  has  led  to  not  a  little  controversy, — ^the 
foreigners  naturally  giving  a  liberal,  and  the  Chinese  a 

'*Cf.  Tyau,  op.  cit.,  p.  98.  By  Section  12  of  the  Sino-British  Mackay 
Treaty  of  1902  it  is  expressly  provided  with  reference  to  the  ports  of 
Changsha,  Wanhsien,  Nganking,  Waichow  and  Kongmoon,  that  "  foreigners 
residing  in  these  open  ports  are  to  observe  the  municipal  and  police  regu- 
lations on  the  same  footing  as  Chinese  residents,  and  they  are  not  to  be 
entitled  to  establish  municipalities  and  police  of  their  own  within  the 
limits  of  these  treaty  ports,  except  with  the  consent  of  the  Chinese 
authorities."  This  provision  is  repeated  in  the  Sino-Japanese  Treaty  of 
1903  (Article  10)  with  reference,  however,  only  to  the  Port  of  Changsha. 


116      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

narrow,  construction  to  the  term.    Upon  this  point  Dr. 
Tyau  has  the  following  to  say: 

Here  we  have  two  contrary  views  as  regards  the  proper  hmits  of 
a  Treaty  Port.  On  the  face  of  it  the  foreign  view  certainly  seems 
more  reasonable.  Upon  closer  examination,  however,  it  does  not 
seem  so  convincing.  For  we  are  once  more  face  to  face  with  the 
rule  of  interpretation,  already  cited,  respecting  international  servi- 
tudes. Now  the  object  of  designating  a  particular  city  or  port  as 
an  open  port  is  to  reserve  a  particular  area  for  the  residence  of 
foreigners  vrithin  which  they  may  carry  on  their  legitimate  trade 
and  be  amenable  to  their  own  consular  officers.  Over  this  area  the 
territorial  sovereign  has  delegated  his  right  of  control  and  juris- 
diction. And,  therefore,  he  has  also  waived  his  right  to  tax  foreign 
property  therein.  But  such  a  waiver  operates  to  diminish  the 
iamount  of  his  revenue,  and  this  diminution  is  a  loss  to  his  treasury. 
If  the  area  of  the  locality  to  be  exempt  from  the  levy  of  likin  is  in- 
creased, then  the  loss  of  the  territorial  sovereign  will  also  increase, 
since  under  the  treaty  tariff  he  can  levy  duties  on  foreign  imports 
to  the  extent  of  only  five  per  cent,  ad  valorem.  This  loss  must  not 
be  allowed  to  increase,  if  the  national  exchequer  is  not  to  suffer 
further  depletion.  Therefore,  it  is  within  the  prerogative  of  the 
territorial  sovereign  to  say  precisely  what  part  of  his  territory  is 
to  be  exempt  from  the  likin  levy.  The  likin  exemption  area  is  a 
species  of  international  servitudes,  and,  therefore,  all  doubts  in  this 
connection  must  also  be  solved  in  the  grantor's  favor.^" 

However,  in  a  joint  conununication  sent  in  1908  by  the 
Ministers  of  The  Netherlands,  Great  Britain  and  the 
United  States  to  the  Chinese  authorities  it  was  declared : 

That  the  foreign  powers,  in  negotiating  the  treaties,  intended 
that  a  fairly  liberal  area  should  be  comprised  by  the  term  "treaty 
port "  or  "  port  open  to  foreign  trade  "  is  evidenced  by  the  use  of 
the  terms  "cities  and  towns'*  in  the  English  text  of  the  British 
treaties  and  "  ports  et  villes  "  in  the  French  treaties ;  also  by  the 

»  Op.  oit,  p.  97. 


FOREIGN  COMMERCE  117 

rules  regarding  the  issue  of  passports  for  traveling  in  the  interior, 
where  no  passport  is  called  for  within  100  li  of  the  treaty  port. 
.  .  .  The  position  of  the  treaty  powers  in  this  question  is  well 
known.  .  .  .  They  contend  as  they  always  have  done,  that  the 
term  treaty  port  includes  the  city  and  its  approaches  by  land  or 
water,  and  further  that  no  matter  whether  a  place  has  been  opened 
to  foreign  trade  under  treaty  or  by  the  spontaneous  act  of  the 
Chinese  government  the  same  principle  must  apply  for  the  sake  of 
uniformity.^* 

Peking  Not  a  Treaty  Port.  Peking  has  never  been 
made  by  treaty  or  spontaneous  act  of  the  Chinese  Gov- 
ernment an  Open  Port.  However,  without  formal  legal 
basis,  but  with  the  acquiescence  of  the  Chinese  a  number 
of  stores  are  operated  by  foreigners  in  the  capital  city, 
and  other  trading  done.  The  status  of  foreigners  and 
of  the  Legation  Quarter  in  fPeking  will  receive  treatment 
in  Chapter  V." 

Tariff  Rates.  The  tariff  rate  fixed  at  the  time  of  the 
Nanking  Treaty  was  approximately  five  per  cent,  ad 
valorem  for  both  exports  and  imports.  By  the  Tientsin 
Treaties  of  1858  this  rate  was  retained  but  converted 
into  schedules  of  specific  duties,  and  the  free  list  some- 
what lengthened. 

The  next  tariff  revision  did  not  take  place  until  1902 
(effective  in  1903).  At  this  time  the  specific  duties  on 
imports  were  based  upon  the  current  prices  prevailing  in 
1897-1899  the  five  per  cent,  ad  valorem  ratio  being  still 
retained.^^ 

»•  17.  8.  For  Rels.,  1908,  p.  145. 
"  See  post,  p.  219. 

*  Article  VI  of  the  Final  Boxer  Protocol  of  1901  provided: 
"  The  raising  of  the  present  tariff  on  imports  to  five  per  cent,  effective 
[i.  e.,  as  determined  by  market  prices]  is  agreed  to  on  the  conditions  men- 


118      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

It  was  not  long  before  this  revision  of  1902  again  be- 
came unjust  to  China  because  of  the  continued  rise  of 
prices,  the  result  being  that  during  recent  years  the  nomi- 
nal five  per  cent,  which  China  was  permitted  by  the 
Powers  to  levy,  amounted  to  scarcely  more  than  three 
per  cent.,  as  tested  by  the  market  value  of  the  commodi- 
ties exported  and  imported.  China  in  vain  attempted  to 
have  this  injustice  corrected,  but  in  1917,  after  her  en- 
trance into  the  Great  "War  upon  the  side  of  the  Allies,  she 
was  able  to  obtain,  among  other  concessions,  the  promise 
that  her  tariff  should  be  raised  to  an  effective  five  per 
cent. 

As  a  result  of  the  undertaking  thus  entered  into  there 
was  convened  at  Shanghai,  early  in  January,  1918,  a 
Tariff  Revision  Com  mission  composed  of  representa- 
tives from  fifteen  of  the  Treaty  Powers.  The  Commis- 
sion found  great  difficulty  in  agreeing  upon  a  basis  upon 
which  to  estimate  the  market  values  of  commodities  as  it 
was  felt  that  the  then  prevailing  market  prices,  owing  to 

tioned  below.  It  shall  be  put  in  force  two  months  after  the  signing  of  the 
present  protocol,  and  no  exceptions  shall  be  made  except  for  merchandise 
shipped  not  more  than  ten  days  after  the  said  signing. 

"  All  duties  levied  on  imports  ad  valorem  shall  be  converted  as  far  as 
possible  and  as  soon  as  may  be  into  specific  duties.  This  conversion  shall 
be  made  in  the  following  manner:  The  average  value  of  merchandise  at 
the  time  of  their  landing  during  the  three  years  of  1897,  1898,  and  1899, 
that  is  to  say,  the  market  price  less  the  amount  of  import  duties  and  inci- 
dental expenses  shall  be  taken  as  the  basis  for  the  valuation  of  merchan- 
dise. Pending  the  result  of  the  work  of  revision  duties  shall  be  levied 
ad  valorem."    MacMurray,  No.  1901/3. 

It  may  be  observed  that  this  revision  was  dictated  not  so  much  by  a 
desire  upon  the  part  of  the  Powers  to  do  justice  to  China  as  it  was  to 
obtain  a  better  security  for  the  payment  of  the  Boxer  Indemnities. 

It  should  also  be  noted  that  the  revision  of  1902  applied  only  to  imports 
and  not  to  exports,  and  that  the  duties  upon  most  articles  were  made 
specific,  the  ad  valorem  tax  being  retained  only  for  the  less  important 
commodities. 


FOREIGN  COMMEECE  119 

the  war,  were  abnormally  inflated.  It  was  finally  agreed 
that  the  average  prices  prevailing  at  Shanghai  during 
the  years  from  1912  to  1916  inclusive  should  be  accepted. 
It  was  also  agreed  that  the  rates  thus  adopted  should 
remain  for  a  period  of  at  least  two  years  after  the  end 
of  the  war,  and  that  then  another  revision  should  be 
made.  Estimated  by  the  prevailing  prices  in  1918  the 
new  tariff,  which  became  effective,  August,  1919,  does 
not  give  to  China  much  more  than  a  four  per  cent,  eff ec- 
tive  tariff.  The  valuations  for  determining  export  duties 
still  remain  those  fized  by  the  Tientsin  Treaties  of  1858. 

Free  List  for  Importations.  To  the  treaties  of  commerce 
with  China  are  appended  schedules  which  attempt  to 
enumerate  all  the  articles  or  classes  of  articles  likely  to 
be  imported  into  China  together  with  the  valuations  to 
be  placed  upon  them.  Articles  unenumerated  pay  an  ad 
valorem  duty  of  5  per  cent,  upon  the  market  value  of  the 
goods  in  local  currency. 

Foreign  rice,  cereals  and  flour,  gold  and  silver,  both 
bullion  and  coin,  are  declared  not  liable  to  duty.  Fur- 
ther articles  were  enumerated  as  duty  free  in  the  Rules 
attached  to  the  treaties,  but,  by  an  exchange  of  notes, 
these  further  articles  were  taken  from  the  list,  as  neces- 
sarily non-dutiable,  and  the  understanding  declared  that, 
as  to  them,  the  Inspector-General  of  the  Imperial  Mari- 
time Customs  might  deal  at  discretion  according  to  the 
instructions  issued  by  him  subsequent  to  the  signing  of 
the  Final  Protocol  of  September  7, 1901,  which  concluded 
the  Boxer  Troubles. ^^ 

"  MaoMurray,  No.  1903/5. 


120      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Prohibited  Imports  of  Arms  and  Ammunition  and  of 
Salt.  By  Rules  appended  to  the  Customs  Tariff  Sched- 
ules annexed  to  the  various  treaties  it  is  provided  as 
follows : 

**  Except  at  the  requisition  of  the  Chinese  Government, 
or  for  sale  to  Chinese  duly  authorized  to  purchase  them, 
import  trade  is  prohibited  on  all  Arms,  Ammunition,  and 
Munitions  of  War  of  every  description.  No  permit  to 
land  them  wiU  be  issued  until  the  Customs  have  proof 
that  the  necessary  authority  has  been  given  to  the 
importer.  Infraction  of  this  rule  will  be  punishable  by 
confiscation  of  all  the  goods  concerned.  The  import  of 
Salt  is  absolutely  prohibited. "  ^^ 

Likin  and  Other  Transit  Taxes  upon  Exports  and 
Imports.  At  the  time  the  Nanking  Treaty  was  entered 
into  with  its  provisions  regarding  the  fixed  dues  that 
might  be  levied  upon  exports  and  imports,  it  was 
undoubtedly  the  idea  of  the  foreigner  that  the  goods 
thus  entering  into  foreign  trade  should  be  exempted  from 
all  other  taxes  levied  by  or  with  the  acquiescence  of  the 
Government  at  Peking.  This,  however,  was  not  the 
understanding  of  the  Chinese,  or,  if  it  was,  it  was  one 
soon  departed  from  by  them.  As  a  result  of  this  conflict 
of  interpretation  there  has  been  a  controversy  which 
has  now  lasted  three-quarters  of  a  century,  between  the 
Chinese  authorities  and  the  Treaty  Powers — ^the  Chinese 
seeking  to  justify  the  imposition  of  all  sorts  of  taxes 
upon  goods  on  their  way  to  the  Treaty  Ports  for  expor- 

*  This  last  is  because  the  production  of  salt  in  CMna  is  strictly  regu- 
lated, and  the  taxes  upon  its  sale  constitute  one  of  the  most  important  of 
the  sources  of  revenue  of  the  Central  Government. 


FOREIGN  COMMERCE  121 

tation,  and  upon  imported  goods  after  they  have  entered 
China. 

The  most  important  of  these  additional  charges  has 
been  the  transit  tax  known  as  "  Likin."  Morse  gives  the 
following  account  of  the  origin  and  character  of  this  tax 
upon  commodities  carried  from  one  place  to  another  in 
China: 

The  exigencies  of  the  govermnent  during  the  Taiping  rebellion 
drove  the  authorities  to  devise  new  forms  of  taxation,  and  Hkin 
("contribution  of  a  thousandth")  was  instituted.  It  was  first 
heard  of  in  1853;  and  about  1861  when  the  active  suppression  of 
the  rebellion  called  for  largely  increased  expenditure,  it  was  applied 
generally  to  all  the  provinces  then  under  the  control  of  the  Imperial 
authorities.  The  original  theory  of  the  levy,  one-tenth  of  one  per 
cent,  on  the  value,  imposed  no  great  burden  on  trade,  a  tax  of  the 
same  amount  levied  as  wharfage  dues  for  the  maintenance  of  the 
foreign  municipalities  at  Shanghai,  Tientsin,  Hankow,  and  else- 
where, being  scarcely  felt;  but  practice  soon  parted  company  with 
the  theory,  and  the  official  rates  were  much  increased.  Nor  is  the 
tax  uniform  in  its  incidence  in  aU  the  provinces.  Hunan  is  proud 
of  its  independence  and  freedom  from  non-customary  exactions,  and 
in  this  province  the  payment  once  of  the  full  tariff  rate  of  likin 
exempts  goods  from  further  payment  within  the  provincial  Hmits, 
while  the  accretions  and  irregular  exactions  are  less  than  elsewhere 
in  China;  Hunan  is,  however,  exceptional.  Kwangtung  is  more 
nearly  typical  of  the  Empire;  here  between  Canton  and  Wuchow, 
a  distance  of  about  two  hundred  miles  on  the  West  River,  there  are 
six  Hkin  "  barriers,"  each  constituting  a  barrier  to  the  free  move- 
ment of  traffic,  and  each  involving  delay,  vexation,  and  payment. 
Along  the  Grand  Canal  between  Hangchow  and  Chinkiang,  likin 
stations,  alternately  collecting  and  preventive,  are  estabhshed  at 
distances  averaging  ten  miles  one  from  the  other;  and  in  that  part 
of  Kiangsu  lying  south  of  the  Yangtze  there  are  over  250  stations, 
collecting  or  preventive.  ...  To  get  at  the  amount  paid  by  the 
people  is  more  difficult  in  the  case  of  likin  than  of  other  taxes.  The 
land  tax  and  the  grain  tribute  are  assessed  according  to  registers 


122      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

very  strictly  k^t,  and  both  are  under  the  control  of  the  Hsien 
(District  Magistrate),  the  "  Father  and  Mother  of  the  People,"  and 
yet,  as  we  have  seen,  the  regular  legal  accretion  is,  at  the  very 
lowest  estimate,  from  100  per  cent,  up  to  almost  anything  in  reason. 
The  Salt  Administration  is  an  old-established  organization ;  and  yet 
the  actual  receipts  are  threefold  the  reported  collection,  while  the 
people  pay  fivefold  that  amount.^^  Likin  is  a  new  levy  with  its  own 
administration  independent  of  all  other  taxing  agencies,  and  the 
collection  is  much  more  in  the  hands  of  the  officer  in  charge  of  each 
barrier  and  his  subordinates  than  is  possible  with  other  taxes.^^ 

A  Chinese  scholar,  Dr.  Chin  Chu,  speaking  of  Likin, 
says: 

Likin  stations  exist  at  all  large  towns  and  along  the  main  routes 
of  trade — ^both  by  land  and  by  river.  The  rate  of  likin  is  not 
uniform  in  the  country.  But,  as  a  rule,  the  tax  collected  is  three 
per  cent,  at  the  station  of  departure  and  two  per  cent,  at  each 
inspection  station.  The  amount  collected  within  a  province,  how- 
ever, does  not  perhaps  exceed  ten  per  cent.,  but  when  goods  are 
transported  through  several  provinces  it  may  amount  to  fifteen  or 
twenty  per  cent."  ^^ 

Discussing  the  evils  of  this  tax,  Dr.  Chin  Chu  says : 

In  the  first  place,  it  has  no  definite  rule  and  is  subject  to  arbi- 
trary arrangements  of  the  officials  in  charge.  Secondly,  it  is 
generally  collected  in  transit  instead  of  at  the  place  of  consumption, 
thus  constituting  an  effective  bar  to  trade.  Thirdly,  it  taxes,  in 
large  part,  daily  necessaries  and  inflicts  a  heavy  burden  on  the 
poor.  Fourthly,  the  cost  of  collection  is  extremely  high,  and 
finally,  it  is  honeycombed  with  corruption  on  account  of  the  officiala 
in  charge  being  underpaid. 

"This  statement  was  made  by  Mr.  Morse  before  the  placing  of  the  col- 
lection of  the  salt  tax  under  the  administrative  direction  and  control  of  a 
foreigner — Sir  Richard  Dane. 

•*  Trade  and  Administration  in  China,  p.  103. 

"  The  Tariff  Problem  in  China,  p.  103. 


FOREIGN  COMMERCE  123 

Describing  the  maimer  in  which  Likin  is  levied  and 
collected,  Mr.  Gerald  King,  in  a  recent  number  of  the 
Far  Eastern  Review, ^"^  says : 

It  is  not  any  fixed  amount;  it  is  what  the  merchant  will  stand. 
First  there  is  the  hkin  itself,  a  different  rate  at  every  station,  for 
there  is  no  likin  tariff.  Then  there  is  the  dispute  as  to  fare.  Then 
there  is  the  fee  for  examination.  Then  the  bribe  for  non-examina- 
tion. Then  there  is  the  contribution  to  the  repair  of  a  neighboring 
temple.  And  so  on  to  the  end  of  the  merchant's  patience.  The 
ordinary  merchant  would  not,  of  course,  trouble  his  head  with  how 
the  bill  was  made  up.  He  would  immediately  bargain  with  the 
likin  people  for  a  fixed  sum  to  cover  all  his  goods.  These  detailed 
charges  are  only  to  give  an  air  of  verisimilitude  to  an  otherwise 
bold  and  unconvincing  statement. 

Likin  is  not  of  much  direct  benefit  to  the  Government.  It  is 
usually  farmed  out  and  the  farmer  makes  as  much  as  he  can.  If 
it  is  not,  it  makes  little  difference  whether  the  money  is  taken  by 
the  farmer  or  by  the  government's  own  servant,  for  the  latter  simply 
omits  or  reduces  the  entries  in  his  books  to  cover  what  he  pockets. 
Then  the  merchant  connives  at  a  fraud?  Of  course,  he  must.  He 
can  never  expose  it,  for  even  if  there  were  an  honest  Governor,  and 
he  could  get  access  to  him  without  the  matter  being  suppressed  or 
delayed  on  the  way,  the  man  who  would  replace  the  man  dismissed 
would  be  t'other  instead  of  which. 

It  is  to  be  understood  that  this  vexatious  and  oppres- 
sive charge  upon  goods  in  transit  in  China  is  one  that  is 
levied  upon  all  goods  and  is  not  one  made  especially 
applicable  to  goods  imported  from  abroad  or  upon  those 
intended  for  exportation.  But  that  foreign  traders 
should  have  sought  to  escape  from  its  burdens  has  been 
but  natural.  In  general  the  compromise  has  been 
accepted  and  embodied  in  treaties  between  China  and 
the  Treaty  Powers,  that  upon  the  payment  of  a  reason- 

** February,  1919,  p.  70,  "China's  Taxation  of  Imports  and  Exports." 


124      FOBEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

able  fixed  sum,  foreign  goods  shall  be  secure  from  aU 
other  transit  charges. 

By  the  Treaty  of  Nanking  it  was  provided  that 
merchandise  upon  which  the  maritime  duties  had  been 
paid  might  "  be  conveyed  by  Chinese  merchants  to  any 
province  or  city  in  the  interior  of  the  Empire  of  China, 
on  paying  a  further  amount  as  transit  duties,**  this 
amount  being  fixed  by  an  agreement  of  the  next  year  at 
a  rate  not  to  exceed  the  then  rates  which  were  declared 
to  be  moderate.**^ 

By  the  time  of  the  Treaty  of  Tientsin  (1858),  liMn 
had  already  begun  to  make  its  appearance,  and  it  was 
evident  that  some  better  arrangement  than  that  of  the 
Nanking  agreement  would  have  to  be  arrived  at.  It  was, 
therefore,  provided  by  Eule  7  appended  to  the  Tientsin 
Treaty  that,  in  addition  to  the  maritime  duty,  a  fixed 
sum  might  be  paid  at  the  port  or  at  the  first  li'kin  station, 
whereupon  a  certificate  should  be  given  which  could  be 
presented  at  all  other  likin  stations  and  exemption  from 
further  transit  duties  thus  obtained.  This  rule  was  made 
applicable  to  native  products  intended  for  export  as  well 
as  to  foreign  commodities  imported  and  carried  to  the 
interior. 

The  amount  of  transit  duty  thus  agreed  upon  was  fixed 
at  one-half  of  the  export  or  import  duty.  If  the  goods 
were  duty  free  the  transit  charge  was  to  be  two  and  one- 
half  per  cent,  ad  valorem. 

This    arrangement,    simple    and    satisfactory    as    it 

"This,  of  course,  was  before  the  development  of  the  likin  system,  the 
chaises  referred  to  being  what  were  known  as  Lo-ti-shui,  or  Lo-ti-chuan, 
which  were  destination  or  consumption  and  production,  as  well  as  transit, 
taxes. 


FOKEIGN  COMMERCE  125 

appeared  to  be,  did  not,  however,  put  an  end  to  friction 
between  foreign  traders  and  the  Chinese  authorities.  In 
the  first  place,  in  the  administration  of  the  transit  pass 
system  there  was  an  opportunity  for  hindrance  and 
exactions  upon  the  part  of  the  Chinese  officials  which  it 
has  been  found  practically  impossible  to  remove.  In  the 
second  place,  the  Chinese  have  found  it  possible  to  levy 
charges  which,  though  not  nominally  transit  dues,  have 
nevertheless  had  substantially  the  same  incidence.  Upon 
the  first  point  we  may  again  quote  the  words  of  Mr. 
E:ing:2« 

The  transit  pass  is,  of  course,  a  great  deal  better  than  nothing. 
The  main  difficulties  are,  that  in  order  to  see  that  the  goods  being 
conveyed  are  those  covered  by  the  pass,  the  authorities  at  the  various 
barriers  must  have  the  right  of  examination.  This  is  just,  as, 
did  they  not,  the  dishonest  merchant  would  be  able  to  profit  by  it. 
But  the  power  of  examination  gives  them  the  chance  of  making 
additional  squeezes,  for  they  can  always  demand  a  pour  hoi/re  for 
not  examining:  threatening  to  examine  if  it  is  refused,  and  so 
causing  a  delay  of  three  or  four  days  at  each  of  the  barriers  to  be 
passed.  These  difficulties  will  only  cease  with  the  total  abolition 
of  the  barriers.  .  .  . 

...  If  the  merchant  elects  to  move  his  goods  without  a  Transit 
Pass,  he  must  make  his  own  arrangements  with  the  authorities. 
This  is  usually  done  by  large  Chinese  firms  on  the  basis  of  a  fixed 
monthly  payment,  or  fixed  sum  for  each  movement  of  goods.  The 
government  is  doubly  defrauded  by  this  system,  since  the  merchant 
pays  on  less  goods  than  he  moves,  and  the  official  reports  less  duty 
than  the  merchant  paid.  .  .  . 

...  It  sometimes  happens  that  likin  officials  will  compete  with 
the  Transit  Pass  system,  by  offering  a  rate  which  is  just  cheaper 
than  the  cost  of  the  pass,  and  of  course  arranging  to  the  merchant's 

*Far  Eastern  Review,  February,  1919.  "CMna's  Taxation  of  Importa 
and  Exports." 


126      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

satisfaction  that  there  will  be  no  delays,  disputes,  or  attempts  to 
avoid  the  bargain.  This  can  only  be  done  where  the  goods  have 
not  far  to  go,  or  they  would  pass  other  barriers  than  those  under 
the  control  of  the  man  with  whom  the  original  bargain  was  made. 

As  regards  the  defect  of  the  transit  pass  system  that 
it  does  not  prevent  the  Chinese  from  imposing  other 
charges  which,  though  not  nominally  transit  dnes,  never- 
theless impose  a  serions  burden  upon  foreign  export  and 
import  trade,  we  may  quote  the  statement  of  Dr.  Chu. 
He  says: 

On  the  part  of  the  Chinese  it  has  been  claimed  that  duty-paid 
goods  are  liable  to  likin  or  other  taxation  if  in  the  hands  of  a 
Chinese  dealer ;  that  goods  accompanied  by  a  transit-duty  certificate 
are  free  only  of  dues  at  the  barriers  at  which  transit  dues  are 
collected  and  that  on  arrival  at  the  inland  center  to  which  the 
imports  are  to  be  carried,  they  are  subject  to  any  taxation  that 
may  be  imposed  upon  them.  In  other  words,  the  Chinese  oflBcials 
take  the  "  inland  charges  "  to  mean  transit  dues  and  transit  dues 
only.^^  British  merchants,  on  the  other  hand,  have  maintained 
that  by  treaty  the  payment  of  the  tariff  duty  should  protect  their 
goods  from  all  further  taxation  until  the  passage  of  a  barrier 
renders  necessary  either  the  payment  of  the  transit  dues,  or  the 
production  of  a  customs  certificate  showing  payment  of  the  half- 
duty  commutation.  They  further  claim  that  the  imports  having 
paid  both  tariff  and  transit  duties — 7.5  per  cent,  in  all — should 
thereafter  be  free  from  all  taxation  whatsoever.^* 

"  In  some  cases  the  Chinese  authorities,  finding  that  transit  taxes  could 
not  be  collected,  have  imposed  a  so-called  destination  tax  equal  in  amount 
to  the  likin  and  required  to  be  paid  after  the  transit  pass  is  surrendered. 
It  is  to  be  noted  that  in  many  cases  of  this  sort  there  was  involved  a  con- 
flict between  the  local  and  central  governments  in  China.  The  former  being 
deprived  of  the  opportunity  of  collecting  the  likin  and  devoting  its  proceeds 
to  local  purposes  have  sought  to  recoup  themselves  by  imposing  destination 
or  consumption  taxes  and  thus  obtaining  the  revenue  to  which  they  have 
believed  themselves  entitled. 

»  Chin  Chu,  The  Tariff  Problem  in  China,  p.  107. 


FOREIGN  COMMERCE  127 

In  1876,  by  tlie  Chefoo  Convention,  another  attempt 
was  made  to  place  the  matter  upon  a  more  satisfactory- 
basis,  but  again  without  success. 

In  1896,  by  the  Sino-Japanese  Treaty,  the  problem  was 
dealt  with  in  the  following  language — ^the  rights  granted 
to  the  Japanese  becoming,  of  course,  immediately  avail- 
able to  the  nationals  of  the  other  Treaty  Powers.^^ 

Article  X.  All  articles  duly  imported  into  China  by  Japanese 
subjects  or  from  Japan  shall,  while  being  transported,  subject  to 
the  existing  regulations,  from  one  open  port  to  another,  be  wholly 
exempt  from  all  taxes,  imposts,  duties,  likin,  charges  and  exactions 
of  every  nature  and  kind  whatsoever  irrespective  of  the  nationality 
of  the  owner  or  possessor  of  the  articles,  or  the  nationality  of  the 
conveyance  or  vessel  in  which  transportation  is  made. 

Article  XI.  It  shall  be  the  option  of  any  Japanese  subject 
desiring  to  convey  duly  imported  articles  to  an  inland  market  to 
clear  his  goods  of  all  transit  duties  by  payment  of  a  commutation 
transit  tax  or  duty,  equal  to  one-half  of  the  import  duty  in  respect 
of  dutiable  articles,  and  two  and  one-half  per  cent,  upon  all  the 
value  in  respect  of  duty  free  articles;  and  on  payment  thereof  a 
certificate  shall  be  issued,  which  shall  exempt  the  goods  from  all 
further  inland  charges  whatsoever.  It  is  understood  that  this 
Article  does  not  apply  to  imported  opium. 

Article  XII.  All  Chinese  goods  and  produce  purchased  by 
Japanese  subjects  in  China,  elsewhere  than  at  an  Open  Port  thereof 
and  intended  for  export  abroad,  shall  in  every  port  of  China  be 
freed  from  all  taxes,  imposts,  duties,  likin,  charges  and  exactions 
of  every  nature  and  kind  whatsoever,  saving  only  export  duties 
when  exported,  upon  the  payment  of  a  commutation  transit  tax 
or  duty  calculated  at  the  rate  mentioned  in  the  last  preceding 
Article,  substituting  export  duty  for  import  duty,  provided  such 
goods  and  produce  are  actually  exported  to  a  foreign  country  within 
the  period  of  twelve  months  from  the  date  of  the  payment  of  the 

"MacMurray,  No.  1896/4. 


128      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

transit  tax;  all  Chinese  goods  and  produce  purchased  by  Japanese 
subjects  at  the  open  ports  of  China  and  of  which  export  to  foreign 
countries  is  not  prohibited,  shall  be  exempt  from  all  internal  taxes, 
imposts,  duties,  likin,  charges,  and  exactions  of  every  nature  and 
kind  whatsoever,  saving  only  export  duties  upon  exportations ;  and 
all  articles  purchased  by  Japanese  subjects  in  any  part  of  China, 
may  also,  for  the  purpose  of  export  abroad,  be  transported  from 
open  port  to  open  port,  subject  to  the  existing  Rules  and  Regula- 
tions. 

Article  XTTT  makes  provision  regarding  the  re-expor- 
tation of  foreign  goods  imported  into  China.*** 

It  might  seem  to  one  unacquainted  with  conditions  in 
China  and  with  the  attitude  of  the  Chinese  authorities 
towards  the  whole  question,  that  language  as  compre- 
hensive and  as  explicit  as  that  which  has  just  been  quoted, 
would  have  freed  exports  and  imports  from  all  burdens 
except  those  expressly  provided  for.  As  a  matter  of  fact, 
disputes  have  continued  to  the  present  time,  due  to  the 
fact  that  the  Chinese  have  attempted  to  do  by  indirection 
what  they  are  not  permitted  to  do  directly.  Further 
transit  dues,  eo  nomine,  are  no  longer  imposed  upon 
goods  which  have  once  commuted  for  them,  but  there 
exist  a  variety  of  charges  in  the  nature  of  consumption 
taxes,  licenses,  etc.,  the  incidence  of  which  is  finally  upon 
the  goods  imported  or  to  be   exported.    This  is  the 

"  Article  XL  of  the  French  treaty  of  Tientsin,  1858,  contains  the  following 
provision  which,  upon  its  face,  would  seem  to  give  to  foreign  goods  greater 
protection  against  taxation  by  the  Chinese,  than  is  afforded  by  any  other 
treaty  provision.  It  reads :  "  It  is  understood  that  any  obligation  not 
admitted  expressly  in  the  present  convention  shall  not  be  imposed  upon 
[French]  consuls  or  consular  agents  nor  upon  their  nationals."  This  pro- 
vision, however,  is  not  now  appealed  to  by  the  Powers,  that  is,  since  the 
commercial  treaties  of  1902  and  1903  which  are  regarded  as  defining  the 
extent  of  China's  undertakings  with  regard  to  foreign  commerce. 


FOEEIGN  COMMERCE  129 

complaint  of  the  foreign  traders.  Upon  the  part  of  the 
Chinese  authorities  the  claim  is  that  the  transit  pass 
system  is  greatly  abused :  that  foreigners  sell  their  names 
to  dishonest  Chinese  so  that  transit  passes  are  obtained 
to  cover  goods  in  which  the  foreigners  have  no  interest 
whatever.  Thus,  it  is  asserted,  not  only  is  the  revenue 
defrauded,  but  honest  Chinese  merchants  placed  at  a 
disadvantage  in  the  markets. 

It  may  further  be  observed  that  the  Chinese  have 
contended  and  acted  upon  the  contention  that  they  have 
the  right  to  exact  Likin  charges,  or  their  equivalent,  in 
the  form  of  transit  passes,  upon  imports  as  soon  as  they 
pass  outside  the  restricted  areas  within  the  treaty  ports 
set  apart  for  foreign  residence  and  trade.  This  construc- 
tion of  their  treaty  rights  the  Powers  have  resisted  so 
far  as  they  have  been  able. 

Destination  and  Consumption  Taxes.  The  Chinese  have 
contended  that  the  transit  pass  exempts  goods  only  from 
Likin  charges  to  the  point  of  destination,  and  that  once 
that  point  is  reached,  the  goods  lose  all  their  foreign 
character,  and  that,  therefore,  any  further  transship- 
ment is  not  governed  by  treaty  exemptions  from  taxation. 

Also  the  Chinese  have  levied  taxes  termed  **  Boat 
Taxes, '  *  which  have  really  amounted  to,  and  been  intended 
to  amount  to  a  charge  on  the  goods  carried  in  the  boat 
to  or  from  the  ports  for  export  or  import.  These  taxes 
the  Treaty  Powers  have  strenuously,  though  not  always 
successfully,  resisted. 

Especially,  however,  has  controversy  raged  with  refer- 
ence to  certain  consumption  or  destination  taxes  termed 
Lo-ti-chuan  or  Lo-ti-shui,  which  the  Chinese  in  several 
9 


130      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

provinces  have  sought  to  impose  on  foreign  imports.  In 
Chekiang,  Anhui,  and  Kiangsu  these  charges  were 
levied  specifically  upon  foreign  goods  brought  into  the 
interior,  and  their  amounts  were  determined  upon  the 
basis  of  the  Likin  which  had  been  commuted  for  by  the 
purchase  of  transit  passes.  To  this  the  Powers  have 
objected.  For  example,  writing  with  reference  to  this 
matter  to  its  Consul-General  at  Shanghai  (March  22, 
1915)  the  American  Legation  at  Peking  declared  that  the 
taxes  were  opposed  to  treaty  provisions  because  they 
established  a  form  of  taxation  which  was  special  in  its 
application  to  foreign  goods  covered  by  transit  passes, 
thus  discriminating  against  such  goods ;  and  second, 
because  they,  in  effect,  amounted  to  taxes  which  were 
expressly  to  be  foregone  in  return  for  the  payment  of  the 
transit  tax. 

In  a  communication  from  the  American  Legation  to 
the  Chinese  Government,  dated  July  15,  1915,  it  was 
declared : 

The  American  Government  has  never  recognized  the  propriety 
of  levying  a  destination  tax  upon  goods  which  have  paid  the  import 
duty  and  the  transit  pass  duty  entitling  them  under  the  treaties  to 
exemption  from  "all  further  charges  whatsoever."  The  levy  of 
such  a  destination  tax  could  he  justified,  if  at  all,  only  on  the 
theory  that  transit-pass  goods,  having  completed  their  transit  under 
protection  of  the  treaties,  are  thereby  merged  into  the  trade  of 
the  country  so  as  to  be  indistinguishable  from  native  goods.  It  is 
not  consistent  with  that  theory,  that  a  destination  tax  should  be 
made  particularly  apphcable  specifically  to  foreign  goods. 

Chinese  Stamp  Tax  on  Bills  of  Lading,  Etc.  In  October, 
1913,  the  Chinese  Government  levied  a  stamp  tax, 
becoming  effective  March  1,  1914,   on  bills   of  lading. 


FOREIGN  COMMERCE  131 

shipping  companies'  receipts,  consignees'  receipts  and 
other  documents  relating  to  exports  and  imports.  The 
question  having  been  raised  whether  the  charges  thus 
authorized  did  not  operate  as  a  tax  on  the  exports  or 
imports  covered  by  these  documents,  and  therefore  in 
violation  of  China's  treaties  with  the  Powers,  the 
American  Government  indicated  the  view  that  this  con- 
struction need  not  necessarily  be  attached  to  the  tax; 
that,  in  other  words,  this  new  charge  did  not  violate  the 
treaty  provision  that  goods  should  be  exempt  from  all 
further  inland  charges  whatsoever,  or  the  provision  that 
exports  having  paid  transit  tax  should  be  exempt  from 
all  internal  taxes,  import  duties,  likin,  charges  and  exac- 
tion of  every  nature  and  kind  whatsoever  saving  only 
export  duties.  However,  under  date  of  February  28, 
1914,  the  representatives  of  the  other  Treaty  Powers  at 
Peking  sent  to  the  Chinese  Government  a  Diplomatic 
Note  in  which  it  was  declared  that  the  Powers  could  not 
give  their  assent  to  the  application  of  the  stamp  tax  to 
their  nationals.  The  United  States  argues  that  these 
taxes  are  admissible  since  the  limitations  upon  China's 
taxing  powers,  under  the  treaties,  are  specific  and  not 
general  or  absolute.  However,  as  long  as  the  other 
Powers  decline  to  submit  to  these  taxes,  the  United 
States  cannot  well  insist  that  its  own  nationals  should 
pay  them.  The  Chinese  Government  nevertheless  con- 
tinues to  insist  upon  its  right  to  levy  the  tax  and,  in  fact, 
in  many  cases,  it  is  collected. 

Mackay  Treaty  with  Great  Britain,  1902.  With  reference 
to  foreign  trade  and  its  hindrances  by  the  imposition  of 
Likin  and  other  inland  charges  upon  articles  imported 


132      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

from  abroad  and  upon  domestic  goods  intended  for  ex- 
port, Article  VIII  of  the  Sino-British  Mackay  Treaty  of 
1902  is  of  especial  interest.  This  Article  presented  a 
plan  which  was  substantially  accepted  in  the  Japanese 
and  American  treaties  of  1903  whereby  in  exchange  for 
the  right  to  increase  her  import  duties  to  a  total  of  12^^ 
per  cent,  ad  valorem  and  her  export  duties  to  ly^  P^r 
cent.  China  was  wholly  to  abandon  likin  charges  upon 
articles  of  import  or  export.  It  was,  however,  expressly 
provided  that,  before  becoming  effective,  this  arrange- 
ment should  receive  the  approval  of  all  the  other  powers 
who  might  be  entitled  to  most  favored  nation  treatment 
— ^an  approval  which  has  never  been  given  except  by 
Japan  and  the  United  States.^^ 

The  Preamble  of  Article  "Vlll  of  the  Mackay  Treaty 
reads  as  follows : 

The  Chinese  Government,  recognizing  that  the  system  of  levying 
likin  and  other  dnes  on  goods  at  the  place  of  production,  in  transit, 
and  at  destination,  impedes  the  free  circulation  of  commodities 
and  injures  the  interests  of  trade,  hereby  undertake  to  discard 
completely  those  means  of  raising  revenue  with  the  Umitation 
mentioned  in  Section  8  [t.  e.,  on  goods  not  imported  or  intended 
for  foreign  export]. 

The  British  Government,  in  return,  consent  to  allow  a  surtax, 
in  excess  of  the  tariff  rates  for  the  time  being  in  force  to  be  imposed 
on  foreign  goods  imported  by  British  subjects,  and  a  surtax  in 
addition  to  the  export  duty  on  Chinese  produce  destined  for  export 
abroad  or  coastwise. 

It  is  clearly  understood  that,  after  hkin  barriers  and  other 
stations  for  taxing  goods  in  transit  have  been  removed,  no  attempt 
shall  be  made  to  revive  them  in  any  form  or  under  any  pretext 
whatsoever;  that  in  no  case  shall  the  surtax  on  foreign  imports 

"  This  approval,  subject  to  the  same  proviso,  was  given  by  Japan  and  the 
United  States  in  their  treaties  of  1903. 


FOREIGN  COMMERCE  133 

exceed  the  equivalent  of  one  and  a  half  times  the  import  duty 
leviable  in  terms  of  the  Final  Protocol  signed  by  China  and  the 
Powers  on  the  7th  day  of  September,  1900 ;  ^^  that  payment  of  the 
import  duty  and  surtax  shall  secure  for  foreign  imports,  whether 
in  the  hands  of  the  Chinese  or  non-Chinese  subjects,  in  original 
packages  or  otherwise,  complete  immunity  from  all  other  taxation, 
examination,  or  delay;  that  the  total  amount  of  taxation  leviable  on 
native  produce  for  export  abroad  shall,  under  no  circumstances, 
exceed  7^^  per  cent,  ad  valorem. 

Conclusion.  Without  going  further  into  historical  or 
descriptive  detail  of  the  rights  enjoyed  by  foreign  trad- 
ers in  China,  we  may  conclude  this  section  with  two  quo- 
tations from  two  standard  treatises  which  set  forth  in 
general  terms  the  present  situation. 

Dr.  Chin  Chu,  in  his  recently  published  monograph, 
"The  Tariff  Problem  in  China/' ^^  summarizes  these 
rights  as  follows: 

They  may  import  foreign  goods  into,  and  export  native  products 
from,  China  through  each  one  of  the  open  ports,  on  payment  of  a 
tarijS  duty  amounting  to  what  was  five  per  cent,  on  the  average 
values  of  1897-8-9,  in  the  case  of  imports,  and  on  the  values  of 
1860,  in  the  case  of  exports.  The  foreigner  again  may  take  foreign 
goods  to,  and  bring  native  products  from  any  inland  place,  on 
payment  of  an  additional  half  tariff  duty,  in  the  shape  of  transit 
dues.  They  may  also  convey  Chinese  produce  from  port  to  port, 
paying  the  full  export  duty  on  shipment  and  a  half  duty  on  landing. 
At  the  treaty  ports  where  they  reside,  they  are  free  from  aU  tax- 
ation, and  before  1903  they  were  even  allowed  to  bring  in  whatever 
was  required  for  their  personal  and  household  use,  duty-free. 

What  is  most  important  to  them  is  the  fact  that  since  the 

^  That  is,  a  surtax  of  one  and  a  half  times  the  5  per  cent,  allowed  by  the 
final  Protocol  of  1901  would  permit  the  total  import  tax  to  be  12^^  per 
cent,  ad  valorem.    MacMurray,  No.  1901/3. 

°  Op.  cit.,  p.  16. 


134      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

Shimonoseki  treaty  in  1895  they  have  been  given  the  right  of 
manufacturing  any  kind  of  goods  in  the  treaty  ports,  subject  only 
to  the  same  conditions  as  the  producers  of  native  manufactured 
goods  in  China.  Everywhere  they  are  withdrawn  from  Chinese 
control,  and  are  placed  under  their  own  consuls.  But  their  mer- 
chandise can  be  moved  only  in  accordance  with  Chinese  customs 
regulations,  and  ships  must  anchor  in  accordance  with  harbor  rules 
and  directions  of  the  Chinese  harbor  master. 

Mr.  Morse  writes  as  follows : 

He  (the  merchant)  is  privileged  to  rent  or  build  his  own 
premises,  subject  only  to  the  condition  that  they  shall  be  at  one 
of  the  treaty  ports  .  .  .  usually  within  a  circumscribed  area  at 
those  ports.  .  .  . 

The  tax  (on  his  goods)  is  strictly  limited  to  the  rates,  based  on 
a  uniform  five  per  cent,  levy,  specified  in  a  revenue  (non-protec- 
tive) tariff,  which  forms  an  integral  part  of  the  treaty  under 
which  he  lives  and  trades.  From  the  inland  taxation,  too,  which 
presses  so  heavily  on  Chinese  traders  who  are  subject  to  the  levy 
of  likin,  his  goods  are  exempted  by  payment  of  "  transit  dues,"  not 
exceeding  a  nominal  two  and  one-half  per  cent,  ad  valorem. 

No  Chinese  authority  has  a  right  to  claim  any  municipal  taxes 
from  foreign  premises ;  and  within  the  "  areas  reserved  for  foreign 
residence  and  trade,"  all  taxes  levied  are  solely  for  the  benefit  of 
such  reserved  area.  The  foreign  resident  is  equally  free  from  the 
incidence  of  benevolence,  or  from  the  necessity  of  contributing  to 
public  charities  and  patriotic  funds,  or  from  inducement  to  buy 
official  honours  and  titles,  to  all  of  which  the  Chinese  merchant  is 
liable. 

No  capitation  tax  may  be  imposed,  or  right  of  deportation 
exercised  on  foreigners  by  the  Chinese  officials,  as  was  the  case 
in  the  old  days. 

No  foreign  merchant  is  now  liable  for  any  but  his  own  criminal 
offenses,  and  for  those  with  which  he  may  be  charged  he  is  judged 
according  to  the  provisions  of  his  own  laws. 

In  civil  cases  he  is  held  accountable  for  the  requirements  of  the 
commercial  code  of  his  own  country;  and  in  suits  against  Chinese 


FOEEIGN  COMMERCE  135 

he  is  aided  by  the  advocacy  of  his  own  official  representative,  the 
Consul. 

Finally,  in  at  least  ten  of  the  Treaty  Ports,  the  foreign  merchants 
collectively  are  privileged  to  form  their  own  municipal  government, 
subject  only  to  the  oversight  of  the  Consuls,  to  tax  themselves  and 
administer  the  proceeds  of  the  taxes,  to  construct  their  own  roads, 
and  to  control  their  own  measures  of  police  and  sanitation. 

Others  could  be  added,  but  these  constitute  a  formidable  list  of 
exceptional  privileges,  enjoyed  by  the  foreigner  and  denied  to  the 
Chinese." 

Maritime  Customs  Administration.^'  The  term  *  *  Mari- 
time Customs  *'  has  come  into  official  and  general  use  to 
distinguish  the  customs  levied  on  foreign  exports  and 
imports  from  the  native  customs  levied  on  purely  domes- 
tic trade.  As  will  presently  be  seen,  however,  to  a  certain 
extent  these  native  customs  are  now  administered  in 
connection  with  the  maritime  or  foreign  customs. 

It  has  already  been  pointed  out  that  in  1842  by  the 
Treaty  of  Nanking  the  duties  leviable  upon  foreign 
exports  and  imports  were  placed  upon  a  fairly  definite 
basis.  The  levying  and  collection  of  these  duties,  thus 
agreed  upon  remained,  of  course,  in  the  hands  of  the 
Chinese  local  officials.^®  Owing,  however,  to  the  incom- 
petency and  still  more  to  the  venality  of  these  oflficials 
many  evils  arose.    Smuggling  was  carried  on  in  a  whole- 

"  Trade  and  Administration  of  China,  p.  190. 

"  This  description  of  the  maritime  customs  is  based  upon  the  accounts 
given  by  Morse  in  his  Trade  and  Administration  of  China,  by  Chin  Chu  in 
his  Tariff  Problem  in  China,  and  by  Mr.  Grerald  King  in  his  excellent  article 
in  the  Far  Eastern  Review,  for  February,  1919,  pp.  67  et  seq. 

"  By  the  Nanking  Treaty  of  1842  Great  Britain  exacted  of  China  an  in- 
demnity of  Tls.  21,000,000  the  payment  of  which  was  to  be  secured  by  the 
customs.  To  see  that  this  agreement  was  carried  out  the  British  Govern- 
ment at  the  five  ports  opened  by  the  treaty  appointed  officials  to  collect  the 
duties  paid  by  British  merchants  and  this  practice  was  soon  followed  by 
other  governments.    This  practice  was,  however,  soon  abandoned. 


136      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

sale  manner,  and  corrupt  bargains  between  the  Chinese 
officials  and  merchants  as  to  the  amounts  of  duties  to  be 
paid  became  conmaon.  Finally,  in  1853,  the  whole  system 
of  collection  at  Shanghai  broke  down  when  the  Taiping 
rebels  occupied  the  city. 

In  the  absence  of  customs  officials,  thus  brought  about, 
the  foreign  merchants  agreed  among  themselves  to  de- 
clare their  goods  before  their  respective  consuls  and  to 
pay  to  them,  or  to  give  bond  for  their  payment,  the  five 
per  cent,  duties, — ^the  amounts  thus  paid  to  be  accounted 
for  to  the  Chinese  government. 

This  plan,  however,  did  not  work  very  satisfactorily, 
throwing  as  it  did  a  very  considerable  amount  of  extra 
work  upon  the  consuls,  and  the  result  was  that  in  1854 
an  agreement  was  entered  into  between  the  local  official, 
the  *  *  Taotai  * '  of  Shanghai,  and  the  British,  French  and 
American  consuls,  according  to  which  the  whole  matter 
of  administering  the  maritime  customs  at  Shanghai  was 
to  be  handled  by  three  foreigners,  to  be  appointed  by  the 
Taotai  and  to  be  termed  Inspectors  of  Customs. 

The  first  appointees  under  this  arrangement  were  Cap- 
tain Thomas  Wade  (British),  Mr.  L.  Carr  (American), 
and  Mr.  Arthur  Smith  (French).  After  a  year  Mr. 
"Wade  resigned  and  was  succeeded  by  Mr.  H.  N.  Lay  who, 
in  1859,  received  the  title  Inspector  General  and  was  also 
given  by  the  Chinese  Government  supervision  over  the 
system  of  lights  and  buoys  .^'^ 

"By  the  tenth  "Rule  of  Trade,"  it  was  agreed  that  a  British  subject 
should  receive  this  appointment  as  Inspector-General.  Mr.  Lay  continued 
to  be  a  member  of  the  British  Consular  Service.  These  Rules  of  Trade  were 
drawn  up  by  the  Tariff  Commission,  authorized  by  the  Tientsin  Treaty  of 
1858.    Rule  10  read  as  follows: 

"  It  being  by  Treaty,  at  the  option  of  the  Chinese  Government  to  adopt 
what  means  appear  to  be  best  suited  to  protect  its  revenues,  accruing  on 


FOREIGN  COMMERCE  137 

In  1863  Mr.  Lay  quarreled  with  the  Chinese  Govern- 
ment about  a  matter  not  connected  with  the  customs,  and 
was  dismissed  by  that  government  and  Mr.  Robert  Hart 
appointed  in  his  place — a  position  which  he  held  until 
1908.^^  Since  then  Mr.  F.  A.  Aglen  has  been  the  In- 
spector General.  Replying  to  a  letter  from  the  British 
Minister,  the  Chinese  Foreign  Office  in  May,  1908,  gave 
assurance  that  as  long  as  British  trade  should  predomi- 
nate in  China  a  British  subject  would  be  appointed  to  the 
Inspectorate  General. 

For  the  purpose  of  this  volume  it  will  not  be  necessary 
to  trace  the  development  of  the  administrative  system 
which  Sir  ^^  Robert  Hart  built  up.  A  description  of  its 
present  organization  and  mode  of  operation  will  be 
sufficient. 

This  system  now  applies  to  the  collection  of  duties  on 
foreign  goods,  exported  and  imported,  at  all  the  Treaty 
Ports  of  China,  and  also,  as  wiU  later  be  shown,  em- 
braces the  control  of  some  of  the  **  native  customs.*' 
For  a  time  also,  1896  to  1911,  the  Chinese  Post  Office  was 
within  its  jurisdiction. 

British  trade,  it  is  agreed  that  one  uniform  system  shall  be  enforced  at 
every  port." 

"  The  High  OflBcer  appointed  by  the  Chinese  Government  to  superintend 
foreign  trade  will  accordingly  from  time  to  time,  either  himself  visit,  or 
will  send  a  deputy  to  visit,  the  different  ports.  The  said  High  Officer  will 
be  at  liberty,  of  his  own  choice,  and  independently  of  the  suggestion  or 
nomination  of  any  British  authority,  to  select  any  British  subject  he  may 
see  fit  to  aid  him  in  the  administration  of  the  customs  revenue;  in  the  pre- 
vention of  smuggling;  in  the  definition  of  port  boundaries;  or  in  discharg- 
ing the  duties  of  harbor  master;  also  in  the  distribution  of  lights,  buoys, 
beacons,  and  the  like,  the  maintenance  of  which  shall  be  provided  for  out 
of  the  tonnage  dues." 

"Mr.  Hart  had  been  actually  in  charge  since  1861,  Mr.  Lay  having  re- 
turned to  England  on  sick  leave. 

**He  was  knighted  in  1882  by  the  British  Government;  and  later  made  a 
Baronet.    Sir  Robert  died  in  England  in  1911. 


138      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

The  essential  fact  is  to  be  bom  in  mind  that,  though 
under  the  control  of  a  foreigner  with  almost  autocratic 
administrative  powers,  the  maritime  customs  service 
remains  a  branch  of  the  Chinese  G-ovemment.  That 
government  has  never  attempted  to  interfere  with 
appointments  in  the  service,  nor  to  dictate  its  adminis- 
trative policies.  But,  in  form,  the  orders  issued  by  the 
Inspector  General  are  in  conformity  with  commands  of 
the  Chinese  Government,  and  all  receipts  normally  go 
immediately  into  the  custody  of  banks  designated  for  the 
purpose  by  the  Chinese  Government,  and  do  not  pass 
through  the  hands  of  the  Inspector  General  or  even  of 
the  Commissioners  in  charge  of  the  customs  houses  at  the 
several  Treaty  Ports.  These  commissioners  simply  re- 
ceive the  certificates  that  the  proper  amounts  have  been 
paid  by  the  importer  or  exporter  into  the  banks  desig- 
nated for  their  receipt.  The  sums  thus  received  consti- 
tute a  fund  pledged  for  the  payment  of  certain  of  China's 
foreign  debts  and  therefore,  not  until  these  obligations 
have  been  met  can  the  customs  receipts  be  drawn  upon 
by  the  Chinese  Government. 

Because  of  the  disorder  attendant  upon  the  Revolution 
of  1911,  the  customs  receipts,  for  greater  safety,  were 
deposited  in  foreign  banks  and  could  not  be  drawn  upon 
except  under  the  signature  of  the  Inspector  General  or 
his  representative.  In  1914,  however,  an  arrangement 
was  entered  into  with  the  Chinese  Government  according 
to  which  customs  receipts  should  be  deposited  in  one  of 
the  branches  of  the  Bank  of  China,  which  is  substantially 
a  Chinese  government  institution.**^ 

•For  an  excellent  description  of  the  manner  in  which  customs  receipts 
were  handled  and  foreign  commitments  met  during  the  revolutionary  years 


FOEEIGN  COMMERCE  139 

Present  Customs  Administration.  For  a  description  of 
the  present  organization  of  the  system  we  cannot  do 
better  than  quote  Mr.  King's  recent  article  in  the  Far 
Eastern  Review. 

The  Inspector  General  is  the  representative  of  the  Chinese 
Govemment,  who  employs  the  remainder  of  the  service.  His  will 
is  law,  and  from  his  decisions  there  is  no  appeal.  His  staff  is 
divided  into  three  branches,  the  Revenue  Department,  the  Marine 
Department,  and  the  Works  Department.*^  The  first  is  the  only 
one  dealing  with  customs  matters:  the  two  latter  exist  owing  to 
the  peculiar  conditions  under  which  the  first  functions. 

The  Revenue  Department  employs  about  one  thousand  foreigners, 
including  Japanese,  and  nearly  five  thousand  Chinese. 

The  Marine  Department  consists  of  about  one  hundred  foreigners 
and  twelve  hundred  Chinese,  and  the  Works  Department  of  four- 
teen foreigners  and  fifteen  Chinese. 

The  foreigners  serving  the  Revenue  Department  are  divided  into 
two  classes,  the  Indoor  and  Outdoor  Staffs.  The  Indoor  Staff  may 
be  said  to  be  the  administrative  and  bookkeeping  side,  while  the 
Outdoor  Staff  do  the  examination  work.  Commissioners,  Deputy 
Commissioners,  and  Assistants  make  up  the  Foreign  Indoor  Staff, 
and  various  grades  of  tide  surveyors,  appraisers,  examiners,  and 
tide  waiters,  the  Foreign  Outdoor  Staff.  This  staff  is  recruited 
from  all  the  nations  having  treaty  relations  with  China,  the  repre- 

1911-1914  see  the  memorandum  of  F.  A.  Aglen  published  by  Morse  in  vol. 
rn  of  his  International  Relations  of  the  Chinese  Empire,  p.  401. 

■"  There  was  for  a  time  an  Educational  Department  which  in  1902  was 
merged  in  the  Peking  Governmept  University.  It  had,  however,  only  a 
slight  connection  with  the  Service.  "  It  was  supplied  with  funds  through 
the  Customs,  and  the  Inspector  General  nominated  to  vacant  chairs  in 
Peking  College,  and  frequently  *  lent '  men  from  the  Customs  for  temporary 
instructing  duty ;  but  the  College  was  built  up  and  directed  for  many  years 
by  the  venerable  Dr.  A.  P.  Martin,  educator  and  sinologue.  The  College  at 
Canton,  which  still  survives,  is  small,  and  is  under  the  direct  control  of  the 
Commissioner,  as  quasi  colleague  of  the  Tartar  General,  appointments  to  its 
staif  being  made  by  the  Inspector  General."  Morse,  Trade  and  Adminis- 
tration of  China,  p.  384. 


140      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

sentation  being  roughly  equivalent  to  the  trade  interests  involved. 
Some  important  countries  with  small  trades  have  insisted  on  a 
somewhat  larger  representation  than  their  trade  requires. 

The  Indoor  Staff  is,  for  European  nations,  recruited  either 
through  the  customs  office  in  London  or  by  direct  nomination, 
while  the  Outdoor  Staff  is  taken  on  locally.  It  is  impossible  with 
so  many  nationalities  that  there  should  be  any  fixed  standard  of 
qualifications.  The  question  of  promotion  and  selection  for  com- 
missionerships  are  dealt  with  solely  by  the  Inspector  General.*^  He 
decides  the  staffing  of  the  ports,  an  important  matter  to  members 
of  a  service  operating  over  so  many  degrees  of  latitude,  where  the 
northern  ports  are  generally  considered  superior  climatically  to 
the  southern.  Service  in  some  of  the  Treaty  Ports  which  have 
proved  trade  failures,  but  which  must  be  kept  open,  means  exile 
from  European  society  and  the  conveniences  of  life  for  a  number 
of  years. 

.  .  .  The  Chinese  staff  of  the  Revenue  Department  is  recruited 
by  competitive  examination  and  is  liable  to  serve  in  any  port  in 
China.    All  these  Chinese  are  required  to  speak  English. 

Little  provision  is  made  for  retiring.  The  better  paid  indoor 
men  receive  an  extra  year's  pay  every  seven  years,  which  is  called 
a  Retiring  Allowance,  and  is  intended  to  be  put  aside  as  provision 
for  that  eventuality;  the  less  well  paid  Outdoor  Staff  men  only 
receive  a  year's  pay  every  ten  years,  and  the  Chinese  staff  only 
get  theirs  every  twelve  years.  Leave  is  granted  to  the  Indoor  Staff 
after  the  first  six  years  of  service  for  one  year  on  full  pay,  or  two 
years,  the  second  without  pay,  and  after  that  every  five  years  on 
the  same  terms,  while  the  Outdoor  Staff  have  to  serve  for  ten  years 
before  they  are  given  a  six  months'  leave.  No  passages  are  paid 
home,  but  half  the  return  passage  is  paid  for  the  man  and  his 
family. 

Two  characteristics  of  the  administration  of  the  Mari- 

**At  each  Treaty  Port  there  is  a  commissioner  in  charge  of  the  customs 
house.  He  is  assisted  by  a  deputy  commissioner  and  four  grades  of  assist- 
ants— all  appointed  by  the  Inspector-General,  the  appointments  being  re- 
ported to  the  Chinese  authorities. 


FOEEIGN  COMMEKCE  141 

time  Customs   deserve   especial  mention — ^the  one   for 
approval  and  the  other  for  disapproval. 

The  absolute  powers  of  appointment  and  dismissal 
possessed  by  the  Inspector  General  make  the  system  a 
highly  integrated  and  centralized  one.  This  feature  is  an 
excellent  one  since  it  makes  for  efficiency.  But  not  com- 
mendable is  the  exclusion  of  Chinese  from  all  the  higher 
branches  of  the  system.  It  is  true  that  more  Chinese 
than  foreigners  are  employed,  but  only  since  1907  did  it 
become  possible  for  a  Chinese  to  hold  even  a  full  assist- 
antship.  This  discrimination  against  the  Chinese  was 
undoubtedly  necessary  during  the  early  years  after  the 
service  was  taken  over  by  Sir  Eobert  Hart,  but  it  would 
seem  that  he  might  have  made  much  greater  effort  than 
he  did  to  develop  a  staff  of  Chinese  employees  qualified 
for  the  higher  positions  in  the  service  which,  after  all, 
is  not  a  foreign  one,  but  a  branch  of  their  own  gov- 
ernment. 

Tsingtao:  Customs  Service  at:  A  few  special  words  need 
to  be  said  with  regard  to  the  customs  situation  at  Tsing- 
tao. The  Treaty  of  March  6, 1898  by  which  China  leased 
to  Germany  the  Kiao-Chow  territory  provided  that  the 
matter  of  customs  should  be  determined  by  agreements 
later  to  be  entered  into.  In  pursuance  of  this  under- 
standing, an  agreement  was  signed  at  Peking  on  April 
17, 1899,*^  between  the  German  Minister  to  China  and  Sir 
Robert  Hart  according  to  which  the  commissioner  of  the 
Maritime  Customs  at  Tsingtao  was  to  be  of  German 
nationality  and  his  appointment  to  be  in  accordance  with 
an  understanding  with  the  German  Legation  at  Peking. 

*»MacMurray,  No.  1899/2. 


142      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  members  of  the  European  staff  of  the  maritime  cus- 
toms at  Tsingtao  were  also  to  be  of  German  nationality. 
On  merchandise  brought  by  sea  no  import  duty  was  to  be 
levied,  but  an  import  duty  according  to  existing  treaties 
was  to  be  collected  on  all  goods  passing  the  frontier  of 
the  leased  territory  into  the  interior  of  China.  Similarly, 
Chinese  produce  brought  into  the  territory  for  export 
abroad  was  to  pay  the  export  duties  according  to  existing 
treaties.  The  maritime  customs  office  at  Tsingtao  was  to 
take  no  part  in  the  collection  or  administration  of  ton- 
nage dues,  lighthouse  dues  or  port  dues.  Special  regu- 
lations for  the  control  of  the  importation  and  sale  of 
opium,  arms  and  explosives  were  also  adopted. 

By  another  agreement  between  Sir  Eobert  Hart  and 
the  German  Minister,  dated  December  1,  1905,  it  was 
provided  that: 

After  the  dehmitation  of  the  Tsingtau  free  area  by  the  German 
officials,  the  Chinese  Maritime  Customs  established  in  the  German 
territory  will  levy  all  the  duties  on  goods  passing  outside  the  free 
area,  and  the  Chinese  Government  will  hand  over  annually  to  the 
German  officials  at  Tsingtau  twenty  per  cent,  of  the  net  import 
duties  collected,  as  shown  by  the  statistics  of  the  Kiao-Chow 
customs,  as  its  contribution  to  the  expenses  of  the  territory.  This 
percentage  will  be  fixed  for  the  present  provisionally  for  five  years 
and  payment  will  be  made  in  quarterly  instalments  after  the  end 
of  each  quarter.  If  this  arrangement,  fixing  the  contribution  at 
twenty  per  cent,  should  at  any  time  seem  to  either  party  to  require 
amendment,  notice  is  to  be  given  to  the  other  before  the  beginning 
of  the  fifth  year  in  order  to  afford  time  for  reconsideration.** 

This  agreement  also  provided  that  the  following  goods 
should  be  admitted  duty  free : 

"MacMurray,  1899/2.  Up  to  the  present  time  (1920)  no  change  in  the 
percentage  has  been  made. 


FOEEIGN  COMMERCE  143 

(a)  Articles  for  arming  and  outfitting  the  troops,  including 
uniforms,  if  directly  ordered  by  the  military  or  naval  authorities 
and  if  accompanied  by  certificate  of  the  colonial  government. 

(&)  Stores  and  provisions  ordered  by  the  military  or  naval 
authorities  in  anticipation  of  future  requirements,  if  accompanied 
by  certificate  of  the  colonial  government. 

(c)  Machinery,  plant,  as  well  as  parts  of  machinery,  implements 
and  tools  required  for  manufacturing,  industrial,  and  agricultural 
purposes;  also  all  building  materials,  fittings,  and  other  articles 
for  public  and  official  works.  .  .  . 

(d)  Articles  (vehicles  and  such  like)  passing  to  and  fro  between 
the  free  area  and  outside,  solely  for  ordinary  repairs ;  but  they  are 
to  be  reported  to  the  customs  officers,  that  their  passing  may  be 
noted. 

(e)  All  postal  parcels  imported  and  destined  for  private  use  in 
German  territory,  if  the  duty  which  has  to  be  taxed  in  accordance 
with  the  attached  declaration  does  not  exceed  $1  (value  $20).  The 
customs  are  at  liberty  to  examine  such  parcels  and  verify  declara- 
tions as  occasion  demands. 

(/)  The  personal  luggage  of  passengers,  declared  as  not  con- 
taining dutiable  or  contraband  goods :  it  will  only  be  examined  in 
cases  where  the  customs  consider  it  especially  necessary. 

This  free  list  is  given  because,  since  the  occupation  of 
Kiaochow  by  the  Japanese,  there  has  been  considerable 
complaint  that  the  privileges  of  free  entry  have  been 
greatly  abused.  Especially  does  this  appear  to  have  been 
so  with  reference  to  the  introduction  of  opium  and  arms 
into  China. 

In  connection  with  the  situation  in  Shantung  since  the 
taking  over  of  the  German  leased  territory  and  sphere  of 
interest  by  the  Japanese,  something  wiU  be  said  regard- 
ing the  customs  situation  at  Tsingtao  since  that  time. 
Here  it  is  sufficient  to  say  that,  aside  from  certain  viola- 
tions of  agreements  and  treaties  by  the  Japanese,  the 
chief  controversy  has  been  as  to  the  control  that  the 


144      FOEEIGN  EIGHTS  AND  INTEKESTS  IN  CHINA 

maritime  customs  service  of  China  shoxild  have  over  the 
appointments  of  the  customs  ofl&cials  within  the  area 
occupied  by  the  Japanese.  As  early  as  December,  1914, 
the  Japanese  insisted  that  they  should  control  these 
appointments,  appointing  whom  they  might  see  fit  and 
without  regard  to  whether  the  one  appointed  had  or  had 
not  previously  been  in  the  maritime  customs  service. 

This  contention  was  met  by  diplomatic  pressure 
exerted  by  the  other  powers,  especially  by  Great  Britain, 
and,  as  a  result,  an  agreement  was  reached,  August  6, 
1915,  under  which  Japanese  were  to  be  appointed  to  the 
places  previously  held  by  German  nationals,  and  the  cus- 
toms and  duties  collected  by  the  Japanese  since  occupa- 
tion (less  twenty  per  cent.)  were  to  be  surrendered,  as 
the  Germans  had  done,  to  the  Maritime  Customs  Service.*'* 

Dairen,  Customs  Administration  of.  By  an  agreement 
entered  into  between  the  Governments  of  China  and 

*See  post,  p.  235.  Regarding  the  demands  at  first  put  forward  by 
Japan,  Hombeck  makes  the  following  comment :  "  The  Japanese  contended 
that  the  only  satisfactory  solution  would  be  for  the  Japanese  Government 
to  appoint  a  Japanese  commissioner  and  a  full  Japanese  staff.  To  under- 
stand the  significance  of  this  it  must  be  remembered  that  the  Chinese  cus- 
toms revenue  is  hypothecated  to  the  service  of  the  Boxer  indemnity  which 
is  a  debt  due  to  the  Powers;  that  Kiaochow,  though  in  German  occupation, 
has  been  Chinese  territory;  that  the  customs  revenue  from  there  went — 
after  deducting  twenty  per  cent,  for  local  purposes — into  the  Chinese  treas- 
ury; that  the  Chinese  Customs  service  is  internationally  recruited;  and 
that  positions  in  the  customs  service  have  been  held  by  a  regular  process 
of  entrance  and  promotion.  Hence  the  Japanese  demands  meant  either  the 
establishing  of  a  separate  Japanese  Customs  regime  on  Chinese  soil,  with 
the  subtraction  of  the  Tsingtao  revenues  from  the  Chinese  revenues — ^thus 
involving  an  invasion  of  China's  sovereignty  and  a  detriment  to  the  finan- 
cial rights  of  the  Powers;  or  an  infraction,  in  favor  of  Japanese  subjects, 
of  the  rules  and  system  of  the  Chinese  Customs  Service,  placing  Japanese 
by  appointment,  and  without  the  authority  of  the  Inspector-General,  over 
the  heads  of  other  foreigners  who,  being  already  in  the  service,  had  prece- 
dent rights  to  promotion."    Contemporary  Politics  in  the  Far  East,  p.  393. 


POEEIGN  COMMERCE  145 

Japan  in  1907  (May  30),  the  following  regulations  re- 
garding the  establishment  of  a  maritime  customs  office 
at  Bairen  were  adopted :  ** 

The  commissioner  or  chief  of  the  office  is  to  be  a 
Japanese  and  for  his  successors  the  Inspector-General 
is  to  come  to  an  understanding  with  the  Japanese  Lega- 
tion at  Peking.  The  members  of  the  staff  at  Dairen  are 
also,  as  a  rule,  to  be  of  Japanese  nationality,  although, 
in  cases  of  suddenly  occurring  vacancies  or  to  meet  tem- 
porary requirements,  members  of  other  nationalities  may 
be  provisionally  appointed.  The  Inspector  General  is  to 
inform  the  Governor  General  of  the  leased  area  when  a 
change  of  the  Commissioner  is  contemplated.  All  cor- 
respondence between  the  office  and  Japanese  authori- 
ties or  Japanese  merchants  is  to  be  in  the  Japanese 
language,  but  merchants  of  other  nations  residing  at 
Dairen  may  correspond  in  English  or  in  Chinese.  No 
import  duty  is  to  be  levied  on  merchandise  brought  by 
sea  to  Dairen,  but  the  regular  duty  shall  be  paid  on 
all  goods  passing  the  Japanese  frontier  of  the  leased 
territory  into  the  interior  of  China.  The  regular  ex- 
port duties  are  to  be  paid  on  goods  from  the  interior 
brought  to  Dairen  for  export,  but  "  produce  raised  in, 
and  merchandise  manufactured  from  produce  raised  in 
or  imported  by  sea  into,  the  Japanese  leased  territory 
shall  pay  no  export  duty.  The  duty  to  be  paid  on  articles 
manufactured  in  the  Japanese  leased  territory  from 
materials  brought  there  from  the  interior  of  China  will 
be  the  same  as  at  present  paid  by  articles  in  similar 
circumstances  in  the  German  leased  territory  of  Kiao- 
chow."  "  Chinese  merchandise  or  products  brought 
from  Chinese  treaty  ports  to  Dairen  shall  pay  no  duty  as 

^MacMurray,  No.  1907/6. 
10 


146      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

long  as  they  remain  inside  Japanese  territory;  but  if 
these  Chinese  merchandise  or  products  pass  the  Japan- 
ese frontier  into  the  interior  of  China,  they  shall  pay 
according  to  existing  treaties."  *'  Chinese  merchandise 
shipped  from  Dairen,  and  having  paid  accordingly 
export  duty,  shaU  be  provided  with  a  receipt,  on  pro- 
ducing which  it  shall  pay,  on  being  landed  at  a  Chinese 
treaty  port,  a  coast  trade  duty  according  to  existing 
treaties.'*  "  For  Japanese  and  other  non-Chinese  mer- 
chandise, on  being  shipped  to  Dairen  from  a  Chinese 
treaty  port,  the  import  duty  paid  at  the  latter  port  shall 
be  refunded  by  drawback  according  to  treaty  stipulation. 
On  being  imported  to  Dairen,  such  merchandise  shall  pay 
no  duty  so  long  as  it  does  not  pass  the  Japanese  frontier 
into  the  interior  of  China.  On  being  re-exported  from 
Dairen  to  other  places  outside  China  such  merchandise 
shall  pay  no  export  duty."  **  Chinese  merchandise  or 
products  having  been  shipped  from  a  Chinese  treaty  port 
to  Dairen  and  reshipped  from  there  to  places  outside 
China  shall  on  this  occasion  pay  no  export  duty,  in  case 
that  documentary  evidence  is  produced  of  their  having 
paid  export  duty  at  the  treaty  port  from  which  they 
came." 

The  Customs  Office  at  Dairen  is  to  take  no  part  in  the 
collection  or  administration  of  tonnage  dues,  lighthouse 
dues,  or  port  dues. 

In  general,  the  customs  tariff  in  vigor  in  the  Chinese 
treaty  ports  is  to  be  applied  by  the  customs  office  at 
Dairen.  This  office  is  to  have  exclusive  charge  of  issuing 
transit  passes  for  merchandise  going  into  the  interior  of 
China  as  well  as  for  goods  from  the  interior  to  Dairen; 
**  and  this  office  wiU  be  charged  as  well  with  all  and  every 


FOREIGN  COMMERCE  147 

function,  right,  or  capacity  which  appertain  in  the  treaty 
ports  to  the  so-called  Chinese  customs  Taotai.'^  For 
transit  passes  one  half  of  the  import  or  export  dues  shall 
be  charged.  **  The  procedure  to  be  observed  in  case  of 
frauds  or  contraventions  committed  by  merchants  against 
the  Maritime  Customs  rules  shall  be  settled  hereafter  by 
a  separate  agreement,  but  it  is  understood  in  principle 
that  all  judicial  procedure  rests  with  the  Japanese 
tribunals.*' 

At  the  same  time  that  these  matters  were  determined, 
another  agreement  relating  to  inland  steam  navigation 
from  Dairen  to  inland  places  was  entered  into,  the  en- 
forcement of  the  regulation  being  placed  in  charge  of  the 
Customs  office.  In  general,  this  agreement  provided  that 
the  rules  and  regulations  of  July  and  September  1898, 
and  the  additional  rules  of  October,  1903,  should  be 
applied.  A  few  special  rules  were  also  laid  down.  Opium 
and  contraband  goods  were  not  to  be  carried  inwards  or 
outwards;  the  Japanese  authorities  at  Dairen  were  to 
assist  in  suppressing  smuggling — especially  of  opium — ; 
the  transmission  of  Chinese  closed  mails  between  Dairen 
and  inland  ports  was  to  be  free  of  charge.^"^ 

Antung  and  Newchwang.  At  Antung  the  Commissioner 
of  Customs  is  a  Japanese.  At  Newchwang,  where  the 
Commissioner  is  at  present  an  Englishman,  the  Japanese 
have  for  several  years  sought  to  have  one  of  their  own 
nationals  appointed  on  the  ground  that  the  trade  at  that 
port  is  predominantly  Japanese.  There  is  no  general 
rule  in  the  Maritime  Customs  that  the  nation  which  has 

*'For  texts  of  these  customs  and  inland  steam  navigation  agreements, 
see  MacMurray  No.  1907/6;  and  Customs  Treaties,  n,  pp.  740-743. 


148      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

the  predominant  trade  at  a  port  should  have  there  one  of 
its  nationals  as  the  Commissioner — indeed  there  are  good 
reasons  why  this  rule  should  not  be  adopted — and  the 
arrangements  that  have  been  made  with  reference  to 
Dairen  and  Tsingtao  cannot  properly  be  quoted  as  prece- 
dents since  both  ports  are  within  leased  areas. 

Special  Arrangement  Regarding  Trade  between  Korea 
and  Manchuria.  Japan  has  with  China  a  special  arrange- 
ment whereby  she  secures  a  reduction  in  customs  dues 
on  goods  imported  into  Manchuria  from  or  through  Korea 
(Chosen)  and  exported  from  Manchuria  to  or  through 
Chosen,  by  rail  via  Antung.  On  dutiable  goods  leaving 
Manchuria  by  rail  for  places  beyond  that  point,  only  a 
two-thirds  customs  rate  is  charged.  The  **  Transit  " 
charges  on  these  goods  are  one-half  of  the  customs 
charges,  that  is,  one-half  of  the  two-thirds  normal  rate. 
Goods  from  Manchuria  for  local  consumption  in  Hsin 
Wiju  or  which  within  two  years  are  carried  by  rail 
beyond  that  point  pay  the  full  rate  but  obtain  a  rebate  of 
one-third.*^ 

Russian  Frontier  Trade.  By  certain  regulations  at- 
tached to  the  St.  Petersburg  Treaty  of  1881  between 
China  and  Eussia  it  was  provided  that  no  duties  should  be 
levied  on  the  frontier  of  the  two  countries  within  a  limit 
of  one  hundred  li  (33  miles).  This  zone  was  abolished 
in  1912  to  take  effect  on  January  1, 1913.  By  regulations 
agreed  ui>on  by  the  two  countries,  under  date  of  July  8, 

•For  the  proclamation  based  upon  this  a^eement,  and  dated  May  29, 
1913,  see  MacMurray,  1913/7. 


FOKEIGN  COMMERCE  149 

1907,  it  was  provided  that  China  was  to  establish  customs 
stations  on  the  frontier,  but  was  to  collect  no  duties  upon 
goods  shipped  by  rail  to  stations  within  this  former  zone. 
Also  that  certain  areas  were  to  be  fixed  within  which 
goods  shipped  by  rail  should  be  required  to  pay  but  two- 
thirds  of  the  regular  Chinese  import  duty.  Thus  at  Har- 
bin the  two-thirds  duty  area  was  to  extend  to  all  points 
within  a  radius  of  ten  li  from  the  station.  At  other  desig- 
nated stations  the  radius  was  to  ^e  five  li.  For  all  its 
smaller  stations  on  the  Eastern  Railway  the  radius  was 
to  be  three  li.  Goods  shipped  out  of  these  areas  were 
to  pay  the  full  duty.  It  was  further  provided  that  while 
this  was  a  special  arrangement  between  China  and  Rus- 
sia, not  only  Russia  but  all  foreign  merchandise  shipped 
to  China  over  the  Chinese  Eastern  Railway  should  enjoy 
the  same  treatment. 

Russia  on  her  part  agreed  to  a  reduction  of  one-third 
on  goods  imported  across  her  frontier  from  China. 

According  to  Article  10  of  the  Regulations  for  trade 
between  China  and  Russia  by  Railway  promulgated  Sep- 
tember 8,  1896,*^  goods  carried  by  rail  were  to  pay  one- 
third  less  than  the  regular  customs  dues.  A  little  later 
(July  8,  1907,  and  May  30,  1908)  it  was  agreed  that  in 
determining  the  duties  to  be  paid  at  the  ports  of  Man- 
chuli  and  Suifenho  there  should  be  the  same  reduction.^® 

Frontier  Trade  with  Burma  and  Indo-China.  By  Article 
in  of  the  amended  Trade  Regulations  for  Trade  between 
China  and  France  of  1887  it  was  provided  that  with  a 


"MacMurray,  1896/5. 

"  MacMurray,  1907/10  and  note. 


160      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

view  to  developing  as  rapidly  as  possible  the  commerce 
between  China  and  Tonkin  the  rights  of  exportation  and 
importation  stipulated  in  Articles  VI  and  VII  of  the 
treaty  of  April  23, 1886,  should  be  provisionally  modified 
so  that  all  foreign  goods  entering  the  Chinese  provinces 
of  Yunnan,  Kwangtung  and  Kwangsi  (the  Kwang  Prov- 
inces) across  the  frontier  should  pay  three- tenths  less 
duties  than  the  regular  tariff,  and  that  the  goods  from 
China  across  the  frontier  should  pay  four-tenths  less 
than  the  regular  rate.^^  It  has  since  been  further  agreed 
that  the  rates  fixed  by  the  Revised  Tariff  of  1903  should 
not  be  followed,  but  those  of  1858.''2  This  agreement  is 
still  in  force. 

According  to  Article  IX  of  the  Regulations  of  1894  for 
trade  between  Yunnan  and  Burma,^^  it  is  provided  that 
imports  to  China  from  Burma  across  the  frontier  should 
be  allowed  a  three-tenths  reduction  from  the  regular 
tariff;  and  that  exports  to  Burma  from  Yunnan  should 
enjoy  a  four-tenths  reduction. 

China  Desires  Abolition  of  Special  Frontier  Trade  Regu- 
lations. It  has  been  estimated  by  the  Government  of 
China  that  it  annually  loses  something  like  800,000  Taels 
by  reason  of  the  special  rates  given  to  frontier  trade  as 
described  in  the  preceding  sections.  At  the  time  that  the 
general  customs  valuations  were  revised  in  1918  it  was 
urged  upon  the  Powers  represented  at  the  Shanghai  Con- 
ference that  these  special  frontier  trade  provisions  be 


"  Customs  Treaties,  I,  927. 

"  See  MacMurray,  tariff  appended  to  1903/5  for  the  rates  fixed  in  1903. 

*  MaoMurray,  1894/1. 


FOEEIGN  COMMERCE  151 

abolished  and  the  regular  tariff  rates  applied.  In  sup- 
port of  this  request  it  was  argued  that  the  special  rates 
had  been  originally  given  in  order  that  a  frontier  trade 
might  be  built  up,  and  that  this  result  having  been  ob- 
tained, there  was  no  longer  sufficient  ground  for  special 
treatment.  Attention  was  called  to  the  fact  that  in  the 
Hi  Convention  of  1881  (Article  XVI)  with  Eussia  it 
was  expressly  provided  that  after  the  overland  trade 
should  have  been  built  up  the  customs  dues  should  be 
fixed  upon  the  regular  five  per  cent,  ad  valorem  basis. 
Also  that  Article  XV  of  that  Convention  had  provided 
that  the  Overland  Trade  Regulations  should  remain  in 
force  for  ten  years,  at  the  end  of  which  period  they  might 
be  changed  by  mutual  agreement.  The  demand  for  the 
reduction  of  duties  levied  at  Antung  had  been  based  by 
the  Japanese  upon  the  Russian  treaties,  and,  therefore 
if  the  concessions  to  Russia  were  abolished  the  basis  for 
a  continuance  of  the  concessions  to  Japanese  frontier 
trade  would  disappear.  As  for  the  frontier  trade  with 
Burma  it  was  contended  that  G-reat  Britain  in  the 
Mackay  treaty  of  1902  had  agreed  that  duties  on  the 
Burma- Yunnan  frontier  should  conform  to  the  general 
regulations  concerning  overland  trade  and  therefore  that 
she  could  not  properly  object  if  the  customs  rates  for  the 
frontier  trade  with  which  she  is  concerned  should  be 
raised  in  common  with  other  frontier  rates.^*  As  to  the 
Ann  am  frontier  trade,  by  Article  VII  of  the  Franco- 
Chinese  Agreement  for  Annam  the  French  have  agreed 
that  they  will  accept  the  same  frontier  arrangements  as 
are  provided  for  the  trade  of  the  Southwest  frontier  with 

••  As  a  matter  of  fact  this  Burma- Yunnan  trade  has  been  inconsiderable 
in  amoimt. 


152      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

other  countries.^'^  Furthermore,  the  duties  on  the  An- 
nam  frontier  had  been  based  upon  the  concessions  made 
by  China  with  regard  to  Eussian  frontier  trade,  and, 
therefore,  if  those  concessions  should  be  surrendered  the 
basis  for  the  Annam  frontier  trade  would  be  removed. 
Finally,  as  regards  the  cancellation  of  the  frontier  trade 
concessions  to  Russia,  it  is  pertinent  to  refer  to  the  lan- 
guage of  the  original  Russian  Land  Trade  Regulations 
of  1869  Article  V  of  which  provided  that, 

Russian  merchants  transporting  Russian  merchandise  shall  on 
their  arrival  at  Tientsin  pay  import  duty  at  the  rate  of  one-third 
less  than  that  specified  in  the  general  foreign  tariff.  This  shall  be 
paid  at  Tientsin.  Merchandise  left  at  Kalgan  shall  pay  import 
duty  at  the  place  according  to  the  general  foreign  tariff.^" 

It  is  clear  that  this  provision  was  intended  to  have  a 
very  limited  application,  and  aimed  merely  to  give 
encouragement  to  trade  in  goods  which,  at  that  time, 
had  to  be  carried  a  long  distance  on  camel  or  donkey 
back  in  order  to  be  sold  in  the  Tientsin  market."^®* 

Enforcement  of  Customs  Regulations.  With  regard  to 
the  enforcement  of  the  customs  regulations  upon  for- 
eigners, difficulty  is  presented  by  the  fact  that,  as  regards 
the  imposition  of  fines,  the  Chinese  are  obliged  to  resort 
to  the  foreign  consuls,  and,  as  we  have  seen,  the  authority 
of  these  being  only  over  the  persons  of  the  offenders, 
their  powers  of  enforcing  the  collection  of  the  fines,  when 

"  Customs  Treaties,  i,  918. 

"•  Customs  Treaties,  i,  155. 

■*  It  may  be  noted  that  at  the  time  of  the  revision  of  the  valuations  for 
customs  purposes  in  1918,  the  Russian  Minister  objected  to  even  a  pro  rata 
increase  of  the  frontier  tariff  and  made  a  reservation  upon  this  point  when 
accepting  the  revision. 


FOREIGN  COMMERCE  153 

imposed,  are  by  no  means  adequate.  The  result  is  that, 
in  almost  all  cases,  proceedings  are  had  only  against  the 
offending  ship  or  its  cargo.  For  unauthorized  trading 
along  the  coast,  the  vessel  can  be  excluded  from  that 
trade  for  the  future,  a  penalty,  however,  which  is  never 
applied;  for  false  **  declarations,"  the  goods  may  be  con- 
fiscated. To  fine  the  merchant  concerned,  in  addition, 
while  legally  possible,  is  for  the  reasons  that  have  been 
stated,  seldom  attempted. 

This  [failure  to  fine]  arises  partly  from  the  very  considerable 
degree  of  protection  accorded  to  foreign  merchants  by  treaty,  and 
partly  from  the  fact  that  there  is  no  competent  tribunal  before 
which  a  revenue  case  can  be  carried ;  the  Chinese  territorial  courts 
are  ruled  out,  the  Consul  is  necessarily  the  advocate  of  his  national, 
and  the  Commissioner  of  Customs  is  party  to  the  case.'*^ 

When  a  dispute  arises  between  the  customs  and  the  importer 
regarding  the  value  or  classification  of  goods,  the  case  is  referred 
to  a  Board  of  Arbitration  composed  as  follows:  an  oflBcial  of  the 
customs;  a  merchant  selected  by  the  consul  of  the  importer;  and 
a  merchant,  differing  in  nationaHty  from  the  importer,  selected 
by  the  senior  consul.  The  final  finding  of  the  majority  of  the  board 
is  binding  upon  both  parties  and  their  decision  must  be  announced 
within  fifteen  days  of  the  reference,  .  .  . 

In  case  of  confiscation  and  fine  by  the  customs  authorities,  there 
are  special  rules  for  joint  investigation  between  the  Commissioner 
of  Customs  and  the  consul  of  the  importer.  When  a  ship  or  goods 
belonging  to  a  foreign  merchant  is  seized  for  confiscation,  the 
superintendent  of  customs-  notifies  those  interested,  who  may, 
through  the  consul,  demand  a  public  investigation.  On  the  consul's 
request,  the  superintendent  holds  a  court  at  which  the  consul  is 
present,  for  the  investigation  and  settlement  of  the  case.  When 
the  consul  and  superintendent  agree  to  confiscate,  the  merchant 
has  no  appeal;  when  the  consul  dissents  from  the  superintendent's 
views,  the  case  is  referred  to  the  superior  authorities  at  Peking — 

"  Morse,  Trade  and  Administration  of  C1\ina,  p.  379. 


154      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  Minister  of  the  nation  on  the  one  side,  and  the  Chinese  Foreign 
OflBce  on  the  other. 

When  the  act  of  which  a  foreign  merchant  is  accused  is  one 
which  is  punishable  by  fine,  the  Commissioner  of  Customs  enters 
a  complaint  at  the  consulate,  and  the  consul  wiU  hold  a  court,  the 
commissioner  being  present,  for  the  investigation  and  settlement 
of  the  case.  When  the  commissioner  dissents  from  the  consul's 
views,  the  case  wiU  be  referred  to  the  superior  authorities  at 
Peking." 

Native  Customs.  Distinct  from  the  Maritime  Customs 
to  which  the  preceding  discussion  has  been  devoted,  are 
the  native  or  "  regular  *'  customs  which  have  existed  in 
China  since  eariy  times.  These  have  always  been  con- 
trolled by  the  central  government  at  Peking  and  their 
proceeds  covered,  in  theory  at  least,  into  its  treasury. 

These  native  customs  now  fall  into  three  classes :  (1) 
the  inland  customs;  (2)  the  maritime  customs  at  places 
further  distant  than  fifty  li — i.  e.,  about  sixteen  miles — 
from  a  treaty  port;  and  (3)  maritime  customs  at  ports 
within  fifty  li  of  a  treaty  port  and  since  1901  controlled 
by  the  Maritime  Customs  Service."^^ 

•*  Chin  Chu,  The  Tariff  Problem  in  China,  p.  176.  See  Hertslet's  China 
Treaties,  n,  p.  655  for  Rules  agreed  upon  in  1868  for  joint  investigation  in 
cases  of  confiscation  and  fines  by  the  customs  authorities. 

"The  Final  Boxer  Protocol,  enumerating  the  Chinese  revenues  assigned 
as  security  for  the  payment  of  the  indemnities,  included  "  the  revenues  of 
the  Native  Customs,  administered  in  the  open  ports  by  the  Imperial  Mari- 
time Customs." 

The  Sino-British  (Mackay)  treaty  of  1902  provides  (Article  VIII  Sec- 
tions 10  and  11)  :  "A  member  or  members  of  the  Imperial  Maritime  Cus- 
toms Foreign  Staff  shall  be  selected  by  each  of  the  Governors-General  and 
Governors,  and  appointed,  in  consultation  with  the  Inspector-General  of 
Imperial  Maritime  Customs  to  each  province  for  duty  in  connection  with 
native  customs  affairs,  consiunption  tax  and  native  opium  taxes.  These 
oflScers  shall  exercise  an  eflScient  supervision  of  the  working  of  these  depart- 
ments, and  in  the  event  of  their  reporting  any  case  of  abuse,  illegal  ezac- 


FOEEIGN  COMMERCE  155 

With  regard  to  native  customs,  Mr.  Gerald  King  in  the 
article  from  which  we  have  earlier  had  occasion  to  quote, 
has  the  following  to  say :  *® 

These  native  customs  are  the  rehcs  of  the  old  Chinese  system 
which  was  superseded,  for  cargo  borne  in  foreign  bottoms,  by  the 
Maritime  Customs.  They  also  deal  with  the  junk-bome  cargo 
from  unopened  port  to  unopened  port.  By  the  Peace  Protocol  of 
1901,  these  within  a  50  H  radius  of  the  Treaty  Ports  were  placed 
under  the  control  of  the  Commissioner  of  Customs.  More  diflBculty 
was  experienced  in  enforcing  this  stipulation,  as  the  Chinese  pohcy 
of  patient  unvarying  obstruction  came  into  its  own  once  the  armed 
forces  of  the  aUied  Powers  were  withdravra.  No  one  tariff  exists 
for  the  native  customs.  Each  group  has  a  different  one,  and  in 
many  cases  each  office  in  each  group  has  a  tariff  of  its  own.  These 
are  usually  based  on  tariffs  of  the  Ming  dynasty,  and  deal  with  a 
trade  that  has  long  ceased  to  be  troubled  with  taxes.  As  in  all 
cases  of  Chinese  rules  or  regulations,  the  rules  are  not  so  objection- 
able as  the  exceptions,  which  are  the  majority.  Every  compradore 
can  supply  instances  of  the  curious  extra  charges  which  these 
stations  levy,  and  the  exceptions  made  in  favor  of  certain  classes 
of  goods,  or  of  goods  borne  in  junks  belonging  to  certain  guilds,  etc. 

tion,  obstruction  to  the  movements  of  goods,  or  other  cause  of  complaint, 
the  Governor  Grcneral  or  Governor  concerned  will  take  immediate  steps  to 
put  an  end  to  the  same." 

"  Cases  where  illegal  action  as  described  in  this  Article  is  complained  of 
shall  be  promptly  investigated  by  an  officer  of  the  Chinese  Government  of 
sufficiently  high  rank  in  conjunction  with  a  British  officer  and  an  officer  of 
the  Imperial  Customs,  each  of  sufficient  standing;  and  in  the  event  of  its 
being  found  by  a  majority  of  the  investigating  officers  that  the  complaint 
is  well  founded  and  loss  has  been  incurred  due  compensation  is  to  be  at 
once  paid  from  the  surtax  funds,  through  the  Imperial  Maritime  Customs 
at  the  nearest  open  port.  The  high  Provincial  officials  are  to  be  held 
responsible  that  the  officer  guilty  of  the  illegal  action  shall  be  severely 
punished  and  removed  from  his  post.  If  the  complaint  turns  out  to  be 
without  foTuidation  complainant  shall  be  held  responsible  for  the  expenses 
of  the  investigation."  Similar  provisions  are  to  be  found  in  the  Sino- 
American  treaty  of  1903. 

**Far  Eastern  Review,  February,  1919,  p.  72. 


156      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

The  Maritime  Customs  have  tabulated  the  tariffs  of  those  native 
customs  under  their  control,  and  increased  the  efficiency  of  the 
working.  All  traffic  in  native-owned  junks  must  pass  through  the 
native  customs,  and  the  payment  of  native  customs  charges  does 
not  free  them  from  further  taxation:  it  is  the  first  step  on  the 
ladder.  They  have  then  to  pay  all  the  likin  and  other  charges  in 
force  on  the  route  over  which  they  have  to  pass.  The  native  customs 
are  not  as  vexatious  as  likin.  But  they  are  in  general  ill-admin- 
istered, and,  as  in  all  things  under  purely  Chinese  management, 
there  are  many  complaints  of  squeezes  and  delays.  Their  whole 
policy  is  now  out  of  date.  Before  there  were  other  customs  to  deal 
with  goods  coming  from  other  countries,  it  was  right  that  China 
should  charge  goods  coming  for  sale  in  her  marts.  But  now  there 
is  a  properly  equipped  service  dealing  with  foreign  imports  and 
exports,  it  is  obviously  against  China's  own  interests  to  tax  her 
inter-port  trade.  Their  abolition,  though  impracticable  today, 
would  be  a  benefit  to  the  community. 

No  estimate  can  be  made  of  the  trade  passing  through  the  native 
customs,  and  the  revenue  derived  from  them.  No  statistics  are 
published,  and,  as  has  already  been  said,  there  is  no  tariff  or  set 
of  rules.  The  figures  must  be  large,  but  there  is  no  way  of  arriving 
at  any  estimate  of  the  number  of  junks  engaged  in  the  trade,  the 
value  or  kind  of  the  goods  they  carry,  or  the  amount  of  duties  they 
pay.  Their  working  is  entirely  separate  from  that  of  the  Maritime 
Customs. 

The  Chinese  Post  Office.  Until  1911  the  Chinese  Postal 
Service,  created  by  an  imperial  decree  of  March  20, 1896, 
was  under  the  direction  and  control  of  the  Maritime  Cus- 
toms, and  for  its  development  great  credit  is  due  to  Sir 
Eobert  Hart.  In  1911  the  service  was  divorced  from  the 
customs  and  placed  under  the  ministry  of  Posts  and  Com- 
munications. On  March  1,  1914,  China  announced  her 
adherence  to  the  International  Postal  Union.  For  some- 
time prior  to  that  date,  however,  China  had  had  working 


FOEEIGN  COMMERCE  157 

relations  with  the  Union,  conforming  to  its  requirements, 
and,  in  effect,  getting  the  benefits  of  membership.®^ 

By  a  provision  inserted  in  an  Exchange  of  Notes  of 
April  9,  1898  between  China  and  France  relative  to  the 
railway  from  Tonkin  to  Ynnnanfn  and  the  lease  of 
Knangchouwan  it  was  agreed  by  the  Chinese  Govern- 
ment that  when  it  should  organize  a  definite  postal  sys- 
tem with  a  high  functionary  at  its  head  it  would  give 
consideration  to  the  recommendations  of  the  French  Gov- 
ernment concerning  the  choice  of  foreign  officials  to  be 
appointed. 

At  the  present  time,  the  postal  service  in  China  is  one 
for  which  the  government  deserves  great  credit.  Gener- 
ally speaking,  the  service  is  efficiently  operated,  and  with 
reasonable  financial  success,  notwithstanding  the  fact 
that  China  has  been  obliged  to  acquiesce  in  the  operation 
within  her  borders  of  some  sixty  or  more  foreign  post- 
offices — British,  French,  Japanese,  German  (until  1917), 
Bussian  and  American.^^ 

The  technical  treaty  or  legal  right  of  the  powers  to 
maintain  post  offices  on  Chinese  soil  is  very  doubtful. 
Upon  this  point  we  may  quote  a  letter  of  April  20,  1902, 
of  the  American  Minister  at  Peking  to  his  government.*' 

I  have  given  to  the  question  such  investigation  as  I  have  been 
able,  and  report  that  in  my  judgment  foreign  post  offices  in  China, 
except  at  Shanghai,  are  not  a  necessity,  because  the  Chinese  postal 

•*  For  an  account  of  the  development  of  the  Chinese  postal  system,  see 
Vol.  in.  Chap.  3  of  Morse's  International  Relations  of  the  Chinese  Empire. 
See  also  MacMurray,  1906/3  with  notes  attached  thereto  for  correspondence 
and  negotiations  connected  with  the  admission  of  China  to  the  Inter- 
national Postal  Union. 

•*  America  has  but  one  such  oflSce — ^that  at  Shanghai. 

"  U.  8.  For.  Rels.,  1902,  p.  225. 


158      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

service  under  the  imperial  maritime  customs  is  everywhere  giving 
fairly  satisfactory  service  and  is  rapidly  and  effectively  increasing 
and  extending  into  the  interior. 

The  foreign  post  offices  are  being  established  principally  for 
political  reasons,  either  in  view  of  their  future  designs  upon  the 
Empire,  to  strengthen  their  own  footing,  or  because  jealous  of  that 
of  others.  They  are  not  established  with  the  consent  of  China,  but 
in  spite  of  her.  They  will  not  be  profitable.  Their  establishment 
materially  interferes  with  and  embarrasses  the  development  of  the 
Chinese  postal  service,  is  an  interference  with  Chinese  sovereignty, 
is  inconsistent  with  our  well-known  policy  toward  the  Empire,  and 
I  cannot  find  any  good  reason  for  their  establishment  by  the  United 
States. 

At  Shanghai,  where  the  foreign  mail  routes  center,  they  are 
important,  especially  in  taking  charge  of  and  starting  the  mails 
homeward,  particularly  since  China  is  not  a  member  of  the  Inter- 
national Union  (since  March  1,  1914,  she  has  been  a  member). 
China  appreciates  this  situation,  and  is  willing,  in  fact,  desires,  that 
they  should  remain  there. 

In  a  conmnmication  addressed  to  the  Postal  Union  by 
the  Postmaster  General  of  China,  nnder  date  of  March 
18,  1915,  the  following  argument  was  presented  to  show 
the  impropriety  upon  the  part  of  the  Treaty  Powers  of 
continuing  to  maintain  their  own  post  offices  in  China. 
After  referring  to  pertinent  provisions  of  the  Universal 
Postal  Convention  and  of  the  Reglement  d' Execution, 
the  communication  continues :  *  *  Belying  upon  the  prin- 
ciples inscribed  in  the  Universal  Postal  Convention 
and  in  agreement  on  this  point  with  the  jurists  in  inter- 
national law  of  all  countries,  China  considers  that  by  vir- 
tue of  its  entry  into  the  Union,  the  officers  maintained 
upon  its  territory  by  other  countries  of  the  Union  have 
ceased  to  have  a  legal  existence.  Although  in  consequence 
of  the  difficulties  mentioned  above  and  those  that  have 


FOEEIGN  COMMERCE  159 

their  origin  in  the  present  events  of  the  war,  China  has 
found  itself  obligated,  in  order  not  to  impede  the  trans- 
mission of  its  mails,  to  continue  temporarily  for  the  pur- 
pose of  its  relations  with  other  countries  to  have  recourse 
to  the  intermediation  of  certain  of  the  foreign  post  offices 
established  upon  its  territory,  or  to  accept  this  interme- 
diation, it  must  declare  that  this  course  of  action  implies 
no  recognition  on  its  part  of  the  legality  of  those  offices, 
and  furthermore  that  no  status,  in  that  respect,  can  be 
created  by  the  written  communications  that  have  been  or 
that  may  hereafter  be  exchanged  in  regard  to  them,  either 
with  those  offices  or  with  the  administrations  to  which 
they  belong.  China  protests  against  the  maintenance,  by 
the  majority  of  the  foreign  post  offices  operating  upon  its 
territory,  of  tariffs  lower  than  those  fixed  by  Article  5 
of  the  Rome  Convention,  for  the  payment  of  postage  upon 
mails  exchanged  by  those  offices,  either  between  them- 
selves or  with  the  countries  to  which  they  respectively 
belong.  .  .  . 

China  having  adhered  as  from  September  1  last  to  the 
Rome  Convention  concerning  the  exchange  of  parcels 
post,  must  declare  that  what  has  been  said  above,  in 
regard  to  the  temporary  continuation,  necessitated  by 
circumstances,  of  the  intermediation  of  foreign  post 
offices  established  upon  its  territory,  applies  likewise  to 
the  parcels  post  service.*'** 

The  article  of  the  Universal  Postal  Convention 
referred  to  by  the  Chinese  reads  as  follows : 

•*MacMurray  gives  a  list  (1906/3,  note,)  together  with  the  texts  of 
postal  agreements  which  appear  to  have  been  cancelled  by  the  adherence 
of  China  to  the  International  Postal  Convention  and  Parcels  Post  Conven- 
tion of  May  26,  1906. 


160      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  countries  between  which  the  present  convention  is  concluded, 
as  well  as  those  which  may  adhere  to  it  hereafter,  form  under  the 
title  of  Universal  Postal  Union  a  single  postal  territory  for  the 
reciprocal  exchange  of  correspondence  between  their  post  offices. 

This  provision,  the  Chinese  Government  argued,  caused 
the  Postal  Union  to  be  composed  of  the  totality  of  adher- 
ing countries,  and  not  of  postal  administrations  within  a 
country. 

No  result  has  as  yet  followed  from  this  protest  on  the 
part  of  Ohina. 


CHAPTER  rv 
Inland  Navigation 


In  most  of  the  developed  countries  of  the  world  the 
rights  of  inland  navigation  are  reserved  for  citizens  or 
subjects  respectively  of  those  countries.  In  China,  how- 
ever, by  treaties  beginning  with  that  of  1858,  which 
opened  up  the  Yangtze  River  to  British  traders,  nearly 
all  of  the  inland  waterways  have  been  made  navigable  for 
trade  by  foreigners. 

Inland    Steam    Navigation    Regulations    of    1898.     By 

amended  regulations  issued  by  the  Commissioner  of  Cus- 
toms, July  28,  1898,  the  rules  relating  to  inland  steam 
navigation  were  revised  and  amended.  The  more  impor- 
tant of  the  rules  thus  fixed  were  as  follows : 

The  expression  *'  inland  waters  "  was  declared  to  have 
a  meaning  similar  to  that  attached  to  places  in  the  in- 
terior according  to  the  Chefoo  Convention.^ 

These  waters  are  declared  to  be  open  to  all  such 
steamers,  native  or  foreign,  as  are  specially  registered  at 
the  Treaty  Ports  for  that  trade,  but  they  are  required  to 
confine  their  trade  to  the  inland  waters  and  not  to  proceed 

* "  The  words  *  nei-ti,'  inland,  in  the  clause  of  Article  VII  of  the  Rules 
appended  to  the  Tariff  regarding  carriage  of  imports  inland,  and  of  native 
produce  purchased  inland,  apply  as  much  to  places  on  the  sea-coasts  and 
river  shores  as  to  places  in  the  interior  not  open  to  foreign  trade;  the 
Chinese  Government  having  the  right  to  make  arrangements  for  the  pre- 
vention of  abuses  thereat."  Par.  4,  Section  in.  In  the  Regulations  the 
reference  is  wrongly  given  to  Article  IV. 

11  161 


162      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  places  outside  of  China.  Such  registered  steamers 
may  ply  freely  within  the  waters  of  the  ports  without 
reporting  their  movements  to  the  Customs  officials,  but 
are  obliged  to  report  their  departure  from  and  return  to 
the  port.  No  unregistered  vessel  is  to  be  allowed  to  ply 
inland. 

Dutiable  cargo  shipped  under  these  Regulations  at  any  Treaty 
Port  on  a  registered  steamer  for  conveyance  to  the  interior  must 
be  declared  at  the  Custom  House  and  pay  on  export  such  duties 
as  the  Customs  decide  to  be  leviable.  Dutiable  cargo  brought  from 
inland  to  a  Treaty  Port  is  to  be  in  like  manner  dealt  with  by  the 
Custom  House  there.  As  to  duties  to  be  paid  by  vessels  belonging 
to  foreign  merchants,  they  are  to  be  in  accordance  with  the  treaty 
tariff. 

Cargo  landed  or  shipped  inland  is  to  pay  at  the  place  of  landing 
or  shipment  whatever  duty  and  Likin  local  regulations  call  for. 

Offences  inland,  whether  against  revenue  laws  or  affecting  person 
or  property  are  to  be  dealt  with  by  the  local  authorities  of  the 
district  in  the  same  way  as  if  they  were  committed  by  their  own 
people ;  but  if  the  vessel  concerned  is  foreign-owned  or  the  Chinese 
imphcated  is  a  Chinese  employed  on  board  such  foreign-owned 
vessel,  the  local  authorities  are  to  communicate  with  the  nearest 
Commissioner  of  Customs,  and  the  Commissioner,  in  turn,  with 
the  Consul,  who  may  send  a  deputy  to  watch  the  proceedings.  If 
the  foreigner  claims  the  status  of  a  foreigner,  he  is  to  be  treated 
in  the  manner  prescribed  in  the  treaties  where  foreigners  without 
passports  are  arrested,  and  sent  to  the  proper  Consul  through  the 
Commissioner  of  Customs  at  the  nearby  port. 

If  any  such  steamer  passes  any  inland  station  or  Likin  barrier 
that  ought  to  be  stopped  at  without  stopping,  or  if  any  of  the 
passengers,  crew,  etc.,  create  trouble  inland,  the  vessel  may  be  fined 
or  punished  according  to  the  station  regulations,  and  the  Customs 
may  cancel  the  ship's  papers  and  refuse  permission  for  her  to  trade 
inland  again. 

In  cases  where  foreign-owned  vessels  are  concerned,  the  merchants 
interested  may  elect  to  bring  the  whole  case  and  the  question  of 


INLAND  NAVIGATION  163 

fine  before  a  Joint  Investigation  Court,  to  be  dealt  with  according 
to  the  regulations  for  cases  of  fine  and  imprisonment  in  the 
year  I868.2 

By  Supplementary  Rules  promulgated  in  September, 
1898,  the  following  was  declared :  ^ 

All  inland-going  steamers  are  to  pay  tonnage  dues 
once  in  four  months  at  the  treaty  tarijff  rate,  at  the  port 
where  registered. 

Steamers  are  not  permitted  to  land  cargoes  except  at 
places  ordinarily  recognized  as  places  of  trade  for  native 
vessels. 

The  customs  authorities  at  tlie  Treaty  Ports  are 
required  to  give  certificates  detailing  the  cargoes  shipped 
there  under  their  cognizance,  which  certificates  are  to 
form  the  basis  for  duty  payments  at  way  stations,  and 
the  vessels,  unless  suspected  of  smuggling,  are  not  to  be 
detained  for  rigid  examination. 

The  provincial  authorities  are  to  appoint  at  each 
Treaty  Port  a  responsible  officer  who  is  to  collect  on 
provincial  account  the  prescribed  duties  on  goods  coming 
from  or  going  inland.  He  is  to  receive  in  one  lump  sum 
all  the  dues  and  duties  that  a  vessel  lading  for  a  given 
destination  is  bound  to  pay  at  the  various  stations  it  will 
pass  on  its  way.  Upon  presentation  of  the  receipt  for 
this  payment  the  goods  covered  are  to  be  exempt  from 
levy  of  duty  or  vexatious  examination. 

Yangtze  Regulations  of  1898.  For  trade  on  the  Yangtze 
special  regulations  were  issued  in  August,  1898,  by  the 
Commissioner  of  Customs.* 

» MacMurray,  No.  1898/17.  *  Id.  No.  1898/17. 

*MacMurray,  No.  1898/18. 


164      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  mercliant  vessels  of  the  Treaty  Powers  were 
authorized  to  trade  at  certain  specified  Treaty  Ports  and 
to  land  and  ship  goods  in  accordance  with  special  regula- 
tions at  certain  enumerated  non-treaty  ports.  Shipment 
or  discharge  of  cargo  at  other  points  on  the  river  was 
prohibited.  However,  it  was  provided  that  passengers 
and  their  baggage  might  be  landed  or  shipped  at  any  of 
the  regular  passenger  stations — ^the  baggage,  however, 
upon  pain  of  confiscation,  not  to  contain  articles  subject 
to  duty. 

Merchant  vessels  trading  on  the  river  were  divided 
into  three  classes:  (1)  sea-going  vessels  for  voyage  up 
river  beyond  Chinkiang;  (2)  river  steamers  running 
regularly  between  any  of  the  river  ports  to  Shanghai 
and  any  river  port;  and  (3)  small  craft — ^lorchas,  jxmks, 
etc.  These  vessels  to  be  dealt  with  according  to  treaty 
provisions,  the  rules  of  the  ports  traded  at,  and  the 
special  provisions  of  the  Yangtze  Regulations  therein- 
after contained. 

Revision  of  Rules  in  1902.  Article  X  of  the  Sino-British 
Treaty  of  1902  provided  that  the  rules  relating  to  inland 
navigation  should  be  revised  and  added  to,  and  such 
revision  and  addition  was  attached  to  the  treaty  as 
Annex  C.  By  these  new  regulations,  British  (and  there- 
fore other  foreign)  steamship  owners  are  to  have  the 
right  to  lease  warehouses  and  jetties  on  the  banks  of 
waterways  for  terms  not  exceeding  twenty-five  years, 
with  option  of  renewal  on  terms  to  be  mutually  agreed 
upon.  Such  jetties,  however,  are  not  to  be  erected  in 
such  position  as  to  obstruct  the  inland  waterway  or  inter- 
fere with  navigation.    The  sanction  of  the  nearest  Com- 


INLAND  NAVIGATION  165 

missioner  of  Customs  is  to  be  obtained,  whioh  sanction  is 
not  to  be  arbitrarily  withheld. 

Foreign  merchants  are  to  pay  taxes  and  contributions 
on  these  warehouses  and  jetties  on  the  same  footing  as 
Chinese  owners  of  similar  properties. 

Only  'Chinese  are  to  be  employed  to  reside  in  the  ware- 
houses so  leased,  but  the  foreign  merchants  may  visit 
such  places  from  time  to  time  to  look  after  their  affairs. 
The  jurisdiction  of  the  Chinese  authorities  over  the 
Chinese  in  foreign  employment  is  not  to  be  diminished  or 
interfered  with  in  any  way. 

Steam  vessels  are  declared  liable  for  any  loss  caused 
to  riparian  proprietors  by  damage  done  to  the  banks  or 
works  on  them  or  for  losses  caused  by  such  damage.  K 
it  is  thought  necessary  to  prohibit  the  use  of  shallow 
waterways  by  foreign  launches,  as  likely  to  cause  injury 
to  the  banks,  this  shall  be  proper  provided  a  similar  pro- 
hibition applies  to  Chinese  launches. 

**  The  main  object  of  the  British  Government,"  it  is 
declared,  "  in  desiring  to  see  the  inland  waterways  of 
China  opened  to  steam  navigation  being  to  afford  facili- 
ties for  the  rapid  transport  of  both  foreign  and  native 
merchandise,  they  undertake  to  offer  no  impediment  to 
the  transfer  to  a  Chinese  company  and  the  Chinese  flag 
of  any  British  steamer  which  may  now  or  hereafter  be 
employed  on  the  inland  waters  of  China,  should  the  owner 
be  willing  to  make  the  transfer.  In  the  event  of  a  Chinese 
company  registered  under  Chinese  law  being  formed  to 
run  steamers  on  the  inland  waters  of  China,  the  fact  of 
British  subjects  holding  shares  in  such  company  shall  not 
entitle  the  steamers  to  fly  the  British  flag. ' ' 


166      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Eegistered  steamers  and  their  tows  are  forbidden  to 
carry  contraband. 

A  registered  steamer  may  ply  within  the  waters  of  a  port,  or 
from  one  open  port  to  another  open  port  or  ports,  or  from  one 
open  port  or  ports  to  places  inland,  and  thence  back  to  such  port 
or  ports.  She  may,  on  making  due  report  to  the  Customs,  land 
or  ship  passengers  or  cargo  at  any  recognized  places  of  trade  passed 
in  the  course  of  the  voyage;  but  may  not  ply  between  inland  places 
exclusively  except  with  the  consent  of  the  Chinese  Government. 

Any  cargo  and  passenger  boats  may  be  towed  by  steamers.  The 
helmsmen  and  crew  of  any  boat  towed  shall  be  Chinese.  All  boats, 
irrespective  of  ownership,  must  be  registered  before  they  can  pro- 
ceed inland." 

Foreign  Warships  on  Inland  Waters.  Some  differences 
of  opinion  have  arisen  between  the  Chinese  authorities 
and  the  Treaty  Powers  with  regard  to  the  right  of  the 
warships  of  the  latter  to  visit  inland  ports  in  China.  This 
right  has  been  insisted  upon  by  the  Powers,  but  in  order 
to  sustain  their  contention  they  have  been  obliged  to  give 
very  liberal  interpretations  to  the  single  treaty  stipula- 
tion to  which  they  have  been  able  to  refer.  This  stipula- 
tion is  found  in  Article  LII  of  the  Sino-British  Treaty  of 
1858,  which  reads  as  follows : 

"  British  ships  of  war  coming  for  no  hostile  purpose, 
or  being  engaged  in  the  pursuit  of  pirates,  shaU  be  at 
liberty  to  visit  all  ports  within  the  dominions  of  the 
Emperor  of  China,  and  shall  receive  every  facility  for 
the  purchase  of  provisions,  procuring  water,  and,  if 
occasion  require,  for  the  making  of  repairs.    The  com- 

•  Article  Vm  of  the  Sino- Japanese  Treaty  of  1903  also  provided  for  a 
revision  of  the  Inland  Steam  Navigation  Regulations,  and  this  revision, 
practically  identical  with  that  attached  to  the  British  treaty,  is  contained 
in  Annexes  1  and  2  to  the  Japanese  treaty. 


INLAND  NAVIGATION  167 

manders  of  such  ships  shall  hold  intercourse  with  the 
Chinese  authorities  on  terms  of  equality  and  courtesy.'* 
This  treaty  provision  was  appealed  to  by  the  American 
authorities  in  1903  when  the  American  gunboat  Villalohos 
was  sent  to  certain  places  on  the  upper  Yangtze  and 
protest  thereto  filed  by  the  local  Taotai.  The  corre- 
spondence that  then  ensued  having  been  sent  to  Wash- 
ington, the  Secretary  of  State  wrote  to  the  Secretary  of 
the  Navy : 

The  Department  is  inchned  to  the  opinion  that  Rear-Admiral 
Evans  [then  in  command  of  the  Asiatic  Fleet]  is  right  in  his 
contention  that  our  gunboats  may  visit  the  inland  ports  of  China, 
including  those  which  are  not  treaty  ports.  Even  if  this  right  were 
not  granted  us  by  treaty,  Eear-Admiral  Evans  is  unquestionably 
right  in  using  it  when  hke  ships  of  other  Powers  are  constantly 
doing  so.  .  .  .  This  Department  thinks,  however,  that  Article  LII 
of  the  British  Treaty  of  1858  with  China  which  is  reproduced  in 
Article  XXXIV  of  the  Austro-Hungarian  Treaty  of  1869,  gives 
full  authority  for  his  course.* 

Foreign  Surveys  of  Chinese  Ports.  In  1890  the  ques- 
tion arose  as  to  the  right  of  foreign  war  vessels  to  make 
surveys  and  soundings  in  Chinese  closed  ports  without 
first  obtaining  the  consent  of  the  Chinese  authorities. 
The  right  to  do  so  was  insisted  upon  and  based  upon  the 
provision  of  Article  IX  of  the  Sino-American  Treaty  of 
1858,  which  declares: 

Whenever  national  vessels  of  the  United  States  of  America,  in 
cruising  along  the  coast  and  among  the  ports  opened  for  trade  for 
the  protection  of  the  commerce  of  their  country,  or  for  the  advance- 
ment of  science,  shall  arrive  at  any  of  the  ports  of  China,  the 
commanders  of  said  ships  and  the  superior  local  authorities  shall. 

•  U.  8.  For.  Rels.,  1903,  pp.  85-90. 


168      FOEEIGN  RIGHTS  AND  INTEBESTS  IN  CHINA 

if  it  be  necessary,  hold  intercourse  on  terms  of  equality  and  courtesy 
in  token  of  the  friendly  relations  of  their  respective  nations;  and 
the  said  vessels  shaU  enjoy  all  suitable  facilities  on  the  part  of  the 
Chinese  Government  in  procuring  provisions  or  other  supplies  and 
making  necessary  repairs.  And  the  .  .  .  national  vessels  of  the 
United  States  shaU  pursue  .  .  .  pirates,  and  if  captured  deliver 
them  over  for  trial  and  punishment. 

Writing  to  the  Chinese  Foreign  Office  on  August  4, 
1890,  the  American  Minister  argued  that  the  coasts  of 
China,  if  uncharted,  are  very  dangerous  to  navigation; 
that  the  Chinese  authorities  had  failed  to  chart  them, 
place  buoys,  or  erect  lighthouses;  that  ships  have  the 
right  to  seek  refuge  in  Chinese  ports  in  case  of  accident 
or  dangerous  weather,  or  to  pursue  pirates;  that  they 
cannot  do  so  unless  those  ports  have  been  surveyed  and 
marked  with  buoys  and  lighthouses ;  and  that,  therefore, 
no  objection  should  be  raised  by  the  Chinese  officials  to 
the  exercise  of  a  right  on  the  part  of  foreign  scientific 
officers  to  continue  and  complete  the  hydrography  of  all 
the  ports  of  China.^ 


*  U.  S.  For.  ReU.,  1890,  p.  194. 


CHAPTER  V 

Patent  Rights,  Teade-Mabks  and  Copyeights  and 
Foreign  Cobpobations  in  China 


Treaty  Provisions.  Patent  rights,  trade-marks,  and 
copyrights  receive  inadequate  protection  in  China. 
There  are  no  effective  Chinese  laws  governing  these 
matters,  and,  therefore,  the  Foreign  Powers  have  songht 
by  treaty  stipulations  to  obtain  for  their  nationals  at 
least  a  certain  amount  of  protection.  The  more  impor- 
tant of  these  treaty  provisions  are  given  below.  Article 
Vn  of  the  Anglo-Chinese  (Mackay)  Treaty  of  1902  reads 
as  follows : 

Inasmuch  as  the  British  Government  afEords  protection  to 
Chinese  trade  marks  against  infringement,  imitation  or  colourable 
imitation  by  British  subjects,  the  Chinese  Government  undertakes 
to  afford  protection  to  British  trade-marks  against  infringement, 
imitation  or  colourable  imitation  by  Chinese  subjects. 

The  Chinese  Government  further  undertake  that  the  Superin- 
tendents of  Northern  and  Southern  Trade  shall  establish  oflfices 
within  their  respective  jurisdictions  under  control  of  the  Imperial 
Maritime  Customs  where  foreign  trade-marks  may  be  registered  on 
payment  of  a  reasonable  fee. 

Article  V  of  the  Sino- Japanese  Treaty  of  1903  reads : 

The  Chinese  Government  agree  to  make  and  faithfully  enforce 
such  regulations  as  are  necessary  for  preventing  Chinese  subjects 
from  infringing  registered  trade-marks  held  by  Japanese  subjects. 

The  Chinese  Government  likewise  agree  to  make  such  regulations 
as  are  necessary  for  affording  protection  to  registered  copyrights 

169 


170      FOEEIGIT  RIGHTS  AND  INTERESTS  IN  CHINA 

held  by  Japanese  subjects  in  the  books,  pamphlets,  maps  and  charts 
written  in  the  Chinese  language  and  specially  prepared  for  the  use 
of  the  Chinese  people. 

It  is  further  agreed  that  the  Chinese  Grovernment  shaU  establish 
registration  ofl&ces  where  foreign  trade-marks  and  copyrights,  upon 
application  for  the  protection  of  the  Chinese  Government,  shall  be 
registered  in  accordance  with  the  provisions  of  the  regulations  to 
be  hereafter  framed  by  the  Chinese  Government  for  the  purpose  of 
protecting  trade-marks  and  copyrights. 

It  is  understood  that  Chinese  trade-marks  and  copyrights 
properly  registered  according  to  the  provisions  and  regulations  of 
Japan  will  receive  similar  protection  against  infringement  in 
Japan. 

This  Article  shall  not  be  held  to  protect  against  due  process  of 
law  any  Japanese  or  Chinese  subject  who  may  be  the  author, 
proprietor  or  seller  of  any  publication  calculated  to  injure  the 
weU-being  of  China. 

The  provisions  of  Articles  IX,  X,  and  XI  of  the  Sino- 
American  Treaty  of  1903  read  as  follows : 

Article  IX.  Whereas,  the  United  States  undertakes  to  protect 
the  citizens  of  any  country  in  the  exclusive  use  within  the  United 
States  of  any  lawful  trade-marks,  provided  that  such  country  agrees 
by  treaty  or  convention  to  give  like  protection  to  citizens  of  the 
United  States : 

Therefore  the  Government  of  China,  in  order  to  secure  such 
protection  in  the  United  States  for  its  subjects,  now  agrees  to  fully 
protect  any  citizen,  firm  or  corporation  of  the  United  States  in  the 
exclusive  use  in  the  Empire  of  China  of  any  lawful  trade-mark  to 
the  exclusive  use  of  which  in  the  United  States  they  are  entitled, 
or  which  they  have  adopted  and  used,  or  intend  to  adopt  and  use 
as  soon  as  registered,  for  exclusive  use  within  the  Empire  of  China. 
To  this  end  the  Chinese  Government  agrees  to  issue  by  its  proper 
authorities  proclamations,  having  the  force  of  law,  forbidding  all 
subjects  of  China  from  infringing  on,  imitating,  colorably  imitating, 
or  knowingly  passing  off  any  imitation  of  trade-marks  belonging 
to  citizens  of  the  United  States,  which  shall  have  been  registered 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.      171 

by  the  proper  authorities  of  the  United  States  at  such  offices  as 
the  Chinese  Government  will  establish  for  such  purpose,  on  pay- 
ment of  a  reasonable  fee,  after  due  investigation  by  the  Chinese 
authorities  and  in  compliance  with  reasonable  regulations.^ 

Aeticle  X.  The  United  States  Government  allows  subjects  of 
China  to  patent  their  inventions  in  the  United  States  and  protects 
them  in  the  use  and  ownership  of  such  patents.  The  Government 
of  China  now  agrees  that  it  will  establish  a  Patent  Office.  After 
this  office  has  been  established  and  special  laws  with  regard  to 
inventions  have  been  adopted  it  will  thereupon,  after  the  payment 
of  the  prescribed  fees,  issue  certificates  of  protection,  valid  for  a 
fixed  term  of  years,  to  citizens  of  the  United  States  on  all  their 
patents  issued  by  the  United  States,  in  respect  of  articles  the  sale 
of  which  is  lawful  in  China,  which  do  not  infringe  on  previous 
inventions  of  Chinese  subjects,  in  the  same  manner  as  patents  are 
to  be  issued  to  subjects  of  China. 

Article  XI.  Whereas,  the  Government  of  the  United  States 
undertakes  to  give  the  benefits  of  its  copyright  laws  to  citizens  of 
any  foreign  State  which  gives  to  the  citizens  of  the  United  States 
tJie  benefits  of  copyright  on  an  equal  basis  with  its  own  citizens : 

Therefore,  the  Government  of  China,  in  order  to  secure  such 
benefits  in  the  United  States  for  its  subjects,  now  agrees  to  give 
full  protection  in  the  same  way  and  manner  and  subject  to  the 
same  conditions  upon  which  it  agrees  to  protect  trade-marks,  to  all 
citizens  of  the  United  States  who  are  authors,  designers  or  proprie- 
tors of  any  book,  map,  print  or  engraving  especially  prepared  for 
the  use  and  education  of  the  Chinese  people,  or  translation  into 
Chinese  of  any  book,  in  the  exclusive  right  to  print  and  sell  such 
book,  map,  print,  engraving  or  translation  in  the  Empire  of  China 

*  The  United  States  has  entered  into  a  large  number  of  agreements  with 
other  Powers  for  the  reciprocal  protection  in  China  of  the  trade-marks  of 
their  respective  citizens  or  subjects.  These,  with  their  dates  have  been  as 
follows:  Great  Britain,  June  28,  1905;  France,  October  6,  1905;  Nether- 
lands, October  23,  1905;  Belgium,  November  27,  1905;  Germany,  December 
6,  1905;  Italy,  December  18,  1905;  Russia,  June  28,  1906;  Denmark,  June 
12,  1907;  Sweden,  March  7,  1917;  Japan,  May  19,  1908.  All  of  these  agree- 
ments, except  the  Convention  with  Japan,  were  embodied  in  an  "  Exchange 
of  Notes." 


172      FOEEIGN  EIGHTS  AND  INTEBESTS  IN  CHINA 

during  ten  years  from  the  date  of  registration.  With  the  exception 
of  the  books,  maps,  etc.,  specified  above,  which  may  not  be  reprinted 
in  the  same  form,  no  work  shall  be  entitled  to  copyright  privileges 
under  this  article.  It  is  understood  that  Chinese  subjects  shall  be 
at  liberty  to  make,  print  and  sell  original  translations  into  Chinese 
of  any  works  or  of  maps  compiled  by  a  citizen  of  the  United  States. 
This  article  shall  not  be  held  to  protect  against  due  process  of  law 
any  citizen  of  the  United  States  or  Chinese  subject  who  may  be 
author,  proprietor  or  seller  of  any  publication  calculated  to  injure 
the  well-being  of  China. 

Copyrights.  Experience  has  shown  that  tlie  Article  of 
the  Sino- American  Treaty  relating  to  copyrights  was  so 
poorly  drawn  as  to  give  little  protection  in  China  to  the 
American  author  or  publisher.  This  was  shown  in  the 
suit  brought  by  Ginn  &  Company,  an  American  publish- 
ing firm,  in  the  Shanghai  Mixed  Court  in  March,  1911,  to 
restrain  the  publication  and  sale  by  the  Commercial  Press 
of  Shanghai  of  the  text-book,  Myer's  General  History. 
In  this  case  was  shown  a  clear  instance  of  '  *  piracy ' ' 
upon  the  part  of  the  Shanghai  firm,  but  inasmuch  as  it 
also  appeared  that  the  book  in  question  was  neither  a 
republication  of  a  volume  originally  issued  in  the  Chinese 
text  by  the  American  firm,  nor  a  volume  which  had  been 
"  especially  prepared  for  the  use  and  education  of  the 
Chinese  people,"  it  was  held  by  the  court  that  the  case 
was  not  brought  within  the  terms  of  the  American  treaty. 

In  some  instances  the  Chinese  provincial  authorities 
have  issued  orders  prohibiting  within  their  jurisdiction 
the  republication  and  sale  of  foreign  copyrighted  books 
without  regard  to  whether  they  were  originally  prepared 
for  the  use  and  education  of  the  Chinese  pople ;  but  where 
this  has  been  done  it  has  been  an  ex  gratia  matter  rather 
than  one  of  obligation. 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.      173 

Patents.  From  the  treaty  provisions  which  have  been 
quoted  it  is  seen  that  China  has  promised  to  establish 
a  patent  office  and  to  issue  certificates  having  legal  force 
adequate  for  the  protection  of  foreign  patent  rights. 
This  she  has  not  done,  the  reason,  in  considerable  meas- 
ure, being  that  such  regulations  as  she  proposed  from 
time  to  time  did  not  meet  with  the  approval  of  all  the 
Treaty  Powers. 

The  delay  in  the  issuance  of  patent  regulations  has 
also  been  due  to  the  fact  that  the  Chinese  Government 
has  held  that  it  would  be  best  first  to  draft  a  set  of  trade- 
mark regulations  which  would  be  satisfactory  to  the 
Powers,  and  then  upon  the  basis  of  these,  later  to  elabo- 
rate rules  for  the  protection  of  patents.  The  issuance  of 
these  trade-mark  regulations,  as  will  later  be  seen,  has 
been  postponed  owing  to  the  difficulty  in  securing  the 
approval  of  the  Powers  to  those  which  China  proposed  to 
establish.^ 

As  will  presently  be  pointed  out,  the  Chinese  have 
opened  provisional  offices  in  Tientsin  and  Shanghai  for 
the  "  registration  '*  of  trade-marks.  The  practice  has 
grown  up  of  also  registering  patents  in  these  same  offices. 
Such  registration  is,  strictly  speaking,  without  legal  sig- 
nificance, but  it  is  likely  that  it  will  have  some  probative 
force  as  to  priority  of  claim,  and  certainly  some  moral 
force,  when,  a  patent  office  having  been  opened,  the  inven- 
tions in  question  are  presented  for  recognition. 

Trade-Marks.  In  pursuance  of  her  treaty  provisions 
China  promulgated  in  1904  an  elaborate  set  of  trade- 

»  U.  8.  For.  Rels.,  1906,  Part  I,  p.  260. 


174      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

mark  regulations.^  These  met  with  the  approval  of  the 
American  Grovemment,  but  were  objected  to  by  a  number 
of  the  other  Powers  with  the  result  that,  after  being  in 
force  for  a  time,  they  were  withdrawn.  In  1906  a 
fresh  draft  of  regulations  was  drawn  up  by  the  Chinese 
Government  which,  however,  made  scarcely  a  pretense 
of  meeting  the  wishes  that  had  been  expressed  by  the 
Powers,  and,  consequently,  they  have  objected  to  their 
being  put  into  force.  The  result  has  been  that,  to  the 
time  of  the  presenting  writing  (1920)  no  trade-mark 
regulations,  emanating  from  the  Central  Government 
and  therefore  binding  throughout  China,  have  been 
issued.  However,  in  1907,  the  Shanghai  Taotai  issued 
a  proclamation,  binding  within  his  own  jurisdiction, 
which  was  intended  to  give  protection  against  infringe- 
ments of  foreign  trade-marks  regarding  certain  specified 
articles  (cigarettes  manufactured  by  the  British- Ameri- 
can Tobacco  Company  and  soaps  for  which  the  firm  of 
A.  B.  Burkill  &  Sons  were  the  agents).  A  little 
later,  upon  request  of  the  American  Consul-General  at 
Shanghai,  another  proclamation  was  issued  by  the  Taotai 
with  regard  to  American  goods  the  trade-marks  of  which 
were  being  counterfeited  in  the  Chinese  markets.^    It  is 

»  For  text  of  these  see  U.  8.  For.  Rels.,  1906,  Pt.  i,  p.  237. 

*  U.  8.  For.  Rels.,  1907,  Pt.  I,  p.  262.  In  this  proclamation  the  Taotai 
quoted  the  following  from  a  letter  which  he  had  received  from  Mr.  Denby, 
the  American  Consul  General: 

"  It  has  been  reported  to  me  by  merchants  of  my  country  that  recently 
imscrupulous  Chinese  are  manufacturing  imitations  of  well-known  Ameri- 
can brands  of  goods,  such  as  kerosene  oil,  soap.  Eagle  brand  of  milk,  stoves, 

stockings,  etc.  in  order  to  make  profit This  is  not  right  and  if 

allowed  to  continue  will  lead  to  friction  between  two  friendly  nations." 
Concluding  his  Proclamation,  the  Taotai  said :  "  Besides  having  replied  to 
the  above  letter  and  ordered  all  officials  under  my  jurisdiction  to  forbid 


PATENTS,  TEADE  MARKS,  COPYRIGHTS,  ETC.      175 

the  contention  of  the  American  Government  that  the 
Chinese  are  obligated  to  issue  such  proclamations  when- 
ever requested,  and  when  patents  or  trade-marks  are 
locally  registered  the  Legation  or  Consulate  asks  that  a 
protecting  proclamation  be  issued. 

Although,  as  has  been  said,  there  are  no  general  trade- 
mark regulations  in  China  that  have  been  issued  by  the 
Central  Government,  the  Commissioners  of  Customs  at 
Tientsin  and  Shanghai  have  been  directed  by  the  Peking 
authorities  to  open  provisional  offices  for  the  registration 
of  foreign  trade-marks,  and  the  practice  has  grown  up 
of  also  registering  patents  there.  It  is  conceded,  how- 
ever, that  this  registration  gives  no  real  legal  protection 
to  the  trade-mark.  It  does,  however,  furnish  evidence 
as  to  priority  of  use  in  the  particular  market;  and  this 
is  an  important  matter  since  Chinese  law  recognizes  as 
a  property  right  entitled  to  legal  protection,  the  **  chop  ** 
or  sign  or  label  under  which  a  commodity  is  sold.® 

such  imitations,  I  issue  this  Proclamation  for  the  information  of  all  classes 
that  no  one  is  hereafter  allowed  to  imitate  the  Standard  Oil  Company's 
registered  brands,  and  should  such  case  be  discovered  punishment  and  fine 
will  be  imposed  upon  the  imposter." 

It  was  pointed  out  that  by  thus  mentioning  specifically  the  Standard  Oil 
trade-marks  the  general  force  of  the  prohibition  was  much  weakened.  The 
American  CJonsul-General,  however,  took  the  ground  that  inasmuch  as  the 
Taotai  had  "  ordered  all  oflBcials  imder  his  jurisdiction  to  forbid  such  imi- 
tations," the  prohibition  could  and  should  be  construed  to  cover  all  Ameri- 
can trade-marks. 

'  The  procedure  of  registering  trade-marks  at  Tientsin  is  not  exactly  the 
same  as  at  Shanghai.  At  Shanghai  the  trade-mark  is  filed  at  the  Customs 
House  by  the  consul  or  official  without  formal  application,  a  fee  of  five 
customs  taels  being  paid;  at  Tientsin  a  formal  application  for  registration, 
in  English  and  Chinese,  on  a  special  form  has  to  be  made  by  the  applicant 
or  his  authorized  attorney,  six  copies  of  the  trade-mark  furnished,  a  certi- 
fied copy  of  an  extract  from  the  foreign  register,  if  the  trade-mark  has  been 
registered  elsewhere,  must  be  furnished,  and  a  fee  of  five  customs  taels  paid. 


176      rOREIGN^  RIGHTS  AND  INTERESTS  IN  CHINA 

Vaseline  Case.  In  connection  witli  tlie  protection  of 
American  trade-marks  in  China  a  very  interesting  point 
of  jurisdiction  was  raised  in  a  case  instituted  in  1915  in 
the  Mixed  Court  at  Shanghai,  by  the  Chesebrough 
Manufacturing  Company,  an  American  corporation,  for 
;redress  against  a  Chinese  firm  for  selling  a  Japanese 
product  under  the  trade-mark  **  Vaseline,'*  which  trade- 
mark was  the  property  of  the  American  firm,  and  which 
it  had  duly  registered  in  China. 

When  this  case  was  about  to  come  up  for  a  hearing,  the 
Japanese  Consul-General  at  Shanghai  requested  that  the 
Japanese  Assessor  be  allowed  to  sit  with  the  American 
and  Chinese  officials,  and  that,  in  aU  cases  involving 
Japanese  goods,  even  when  covered  by  a  trade-mark  that 
was  in  imitation  of  an  American  trade-mark  but  where  a 
certificate  of  registration  had  been  granted  by  the  Tokyo 
authorities,  no  further  action  should  be  taken  by  the 
Mixed  Court,  and  that  the  parties  conceiving  themselves 
to  be  aggrieved,  should  resort  to  the  registration  office  in 
Japan.  The  Japanese  Consul-General  later  withdrew  his 
request  to  have  his  Assessor  participate  in  the  judgment, 
but  continued  his  request  that  his  Assessor  be  allowed  to 
be  present  and  observe  the  proceedings.  To  this  last 
request  there  was  no  objection,  for  it  is  usual  to  permit 
the  Assessor  of  any  country  to  sit  and  merely  watch 
proceedings  in  the  Mixed  Court  when  it  is  asserted  that 
interests  of  his  nationals  are  indirectly,  if  not  directly, 
involved  in  the  proceedings.  But  there  was  strong  objec- 
tion to  the  claim  of  the  Japanese  Consul-General  that  the 
Chinese  Mixed  Court  was  without  jurisdiction  in  cases  in 
;which  it  was  charged  that  Chinese  were  selling  Japanese 
manufactured  goods  under  trade-marks  registered  by  the 


PATENTS,  TKADE  MAEKS,  COPYEIGHTS,  ETC.      177 

Japanese  manufacturers  with  their  own  Government  in 
Tokyo,  and  this  without  regard  to  the  fact  that  the  trade- 
mark might  be  a  clear  imitation  of  an  American  trade- 
mark. 

By  the  treaty  of  May  19, 1908,  between  Japan  and  the 
United  States  it  had  been  provided  that  "  The  subjects 
or  citizens  of  each  of  the  high  contracting  parties  shall 
enjoy  the  same  protection,  as  in  the  territories  of  the 
other,  against  the  infringement,  at  any  point  in  China  by 
the  subjects  or  citizens  of  the  other,  of  a  patent  granted, 
or  design  or  trade-mark  registered  at  the  proper  office 
of  the  other."  But  in  the  Chesebrough  case,  the  Ameri- 
can company  had  not  registered  its  trade-mark  in  Japan. 
The  question  therefore  resolved  itself  into  this:  could 
the  fact  that  a  trade-mark  had  been  registered  in 
Japan  by  the  Japanese  manufacturer  protect  Chinese 
defendants  in  China  against  suits  brought  against  them 
in  the  Chinese  courts  charging  them  with  violating  rights 
secured  to  the  American  complainants  by  Chinese  laws 
and  treaties  ? 

In  an  official  communication  of  the  Japanese  Consul- 
General  to  the  American  Consul-General  at  Shanghai, 
dated  February  17,  1915,  it  was  declared : 

I  have  received  an  instniction  from  our  Government  which  rtms 
substantially  as  follows : 

Although  the  present  [Vaseline]  case  is  one  which  relates 
apparently  to  the  American  and  Chinese,  it  is  in  fact  nothing  but 
a  dispute  between  like  trade-marks  possessed  by  our  both  nationals. 
As  the  trade-mark  of  the  above  named  American  is  not  registered 
in  Japan,  it  is  not  a  case  coming  within  the  terms  of  the  treaty 
between  Japan  and  the  United  States,  relating  to  the  mutual 
protection  of  Patents,  Trade-Marks,  etc.  Moreover,  by  virtue  of 
Article  V  of  the  Supplementary  Treaty  of  Commerce  and  Naviga- 
12 


178      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

tion  of  1904  concluded  between  China  and  Japan,  China  takes  upon 
herself  an  obligation  to  protect  our  registered  trade-marks.  It  will 
consequently  constitute  a  violation  of  the  treaty  if  the  Mixed  Courts 
will  prohibit  the  sale  by  Chinese  of  any  merchandise  by  sole  reason 
of  bearing  the  trade-mark  possessed  by  Matsumoto. 

To  this  contention  on  the  part  of  the  Japanese  Govern- 
ment, the  American  Government  entered  a  strong  protest, 
the  point  being  made  that  what  was  asked  was,  in  effect, 
that  the  operation  of  Japanese  domestic  regulations 
should  be  extended  into  Chinese  territory  with  the  result 
that  Americans  would,  or  might  be,  deprived  of  the  right 
to  enforce  in  the  courts  of  China  and  against  Chinese 
nationals,  rights  secured  to  Americans  by  the  Sino- 
American  Treaty  of  1903.  In  other  words,  that  thus  a 
matter  of  Chinese  law  should  be  relegated  to  the  deter- 
mination of  Japanese  tribunals  in  Japan. 

In  a  communication  sent  by  the  American  Minister  at 
Peking  to  the  American  Consul-General  at  Shanghai,  it 
was  said: 

In  view  of  the  Legation,  the  question  of  the  ownership  of  any 
trade-mark  in  China  is  one  of  fact  as  to  priority  of  use  and  adoption 
for  the  trade  in  China;  the  essential  facts  in  such  cases  are  deter- 
minable in  accordance  with  the  legal  system  and  institutions 
applicable  by  the  jurisdiction  to  which  appeal  must  be  made  in 
order  to  establish  and  protect  these  rights  in  this  country. 

Attention  was  also  called  to  Article  IX  of  the  Treaty 
of  1903,  which  has  been  earlier  quoted.  Under  the  pro- 
visions of  this  Article,  it  was  declared,  the  Chesebrough 
Company  was  clearly  entitled  to  have  its  trade-mark 
protected.  "  The  Legation  considers,"  the  communica- 
tion continued, '  *  that  the  duty  of  the  Chinese  authorities 
to  protect  the  Vaseline  trade-mark  as  against  their  own 


PATENTS,  TRADE  MARKS,  COPYRIGHTS,  ETC.   179 

nationals  is  a  matter  of  treaty  obligation  by  China  to 
the  United  States:  and  it  fails  to  understand  on  what 
grounds  a  third  party  can  claim  to  intervene  against  the 
enforcement  of  that  obligation." 

The  Japanese  Government  had  referred,  in  support  of 
its  position  to  Article  V  of  the  Sino-Japanese  Treaty  of 
1903  which  reads : 

The  Chinese  Government  agree  to  make  and  faithfully  enforce 
such  regulations  as  are  necessary  for  preventing  Chinese  subjects 
from  infringing  registered  trade-marks  held  by  Japanese  subjects. 

To  the  argument  based  upon  this  provision,  the  Ameri- 
can Minister  in  the  communication  referred  to,  replied : 

But  this  provision  would  sustain  his  [the  Japanese  Consul- 
General's]  contention  only  if  it  were  assumed  that  the  phrase 
"registered  trade-marks  held  by  Japanese  subjects"  refers  to 
registration  in  Japan  rather  than  in  China.  That  such  is  not  the 
true  meaning  of  the  provision,  however,  is  to  be  inferred  from  the 
terms  of  mutuality  in  which  the  fourth  paragraph  of  the  same 
article  provides  for  the  protection  by  the  Japanese  Government  of 
the  trade-marks  "  properly  registered  according  to  the  provisions 
of  the  laws  and  regulations  of  Japan."  But  even  if  the  terms  of 
the  Japanese  treaty  did  not  so  manifestly  contemplate  registration 
in  China  as  a  condition  precedent  to  the  protection  of  Japanese  (as 
of  American)  trade-marks,  I  should  find  it  impossible  to  reconcile 
myself  to  the  assumption  that  registration  in  Japan — a  unilateral 
domestic  act  involving  no  consent  or  even  cognizance  on  the  part 
of  either  Chinese  or  Americans — could  have  the  effect  of  nullifying 
rights  accruing  to  Americans  in  China  and  protected  by  treaty 
between  China  and  the  United  States,  or  could  make  the  right  to 
protection  in  such  cases  subject  to  determination  by  judicial 
processes  in  Japan.  .  .  .  The  fundamental  error  in  the  position 
taken  by  the  Japanese  Government  in  the  present  case  seems  to  lie 
in  the  assumption  that  registration  of  trade-marks  in  Japan  does 
not  merely  constitute  a  basis  for  judicial  procedure  in  Japanese 


180      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

domestic  and  extraterritorial  courts,  but  that  it  creates  in  favor  of 
its  nationals  an  abstract  and  absolute  property  right  enforceable 
even  under  Chinese  jurisdiction  without  regard  to  the  requirements 
of  Chinese  law.  The  Legation  considers  that  if  this  contention 
were  conceded  it  would  render  potentially  subject  to  Japanese  law 
and  jurisdiction  the  claim  of  Japanese  subjects  to  use  in  China  any 
American  trade-mark  which  they  might  find  it  expedient  to  adopt 
by  registration  at  home,  and  would  effectually  annul  the  only 
protection  for  American  industrial  property  rights  which  now 
exist  in  China. 

In  result,  after  considerable  delay,  the  Mixed  Court 
rendered  a  judgment  in  wliich  the  American  contention 
was  substantially  upheld. 

It  is  impossible  to  deny  the  correctness  of  the  conten- 
tions of  the  American  Government  in  this  important  case. 
Of  course  the  case  would  have  presented  a  different 
aspect  had  the  trade-mark  borne  by  the  goods  in  question 
been  registered  in  China  by  the  Japanese  manufacturer. 
There  would  then  have  been  a  question  as  to  which  of 
the  two  registrations  in  China — ^the  American  and  the 
Japanese — 'was  entitled  to  recognition  and  protection. 

Similar  to  the  Vaseline  case  was  one  involving  a 
German  manufactured  product  sold  by  Chinese  mer- 
chants which  was  an  imitation  of  the  American  Eagle 
Brand  of  Condensed  Milk,  of  prior  use  in  Chinese 
markets.  In  this  case  it  was  suggested  that  the  matter 
be  referred  to  the  Legations  at  Peking  of  the  interested 
parties.  The  American  Government  refused  to  assent 
to  this  and  asserted :  * '  It  is  the  view  of  our  Government 
that  the  judicial  protection  of  American  trade-marks  in 
China,  against  the  infringement  or  dealing  in  infringe- 
ments by  Chinese  vendors,  is  an  absolute  treaty  obliga- 
tion undertaken  by  the  Chinese  Government  which  cannot 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.   181 

be  suffered  to  be  questioned  or  made  subject  to  the  veto 
of  the  Chinese  executive  authorities  and  in  which  the 
consular  or  diplomatic  representatives  of  a  third  Power 
can  have  no  locus  standi  by  reason  of  the  fact  that  the 
infringements  originated  in  their  country  .  .  .  and  that 
the  Consulate  General  should  therefore  use  all  proper 
endeavors  to  bring  about  the  decision  of  the  case  by  the 
Mixed  Court. "« 

Trade-Marks  in  the  Consular  Courts.  Most  of  the 
Treaty  Powers  in  China  have  given  assurance  to  each 
other  that  in  their  respective  consular  courts  adequate 
protection  will  be  given  to  trade-marks  duly  registered 
in  the  other  countries  against  imitations  or  improper  use 
on  the  part  of  their  respective  nationals.*^ 

It  is  to  be  observed  that  if  the  owner  of  a  patent  or 
trade-mark  has  not  registered  it  in  a  foreign  country  he 
has  no  recourse  against  a  national  of  that  country  for 
infringement,  for  the  consular  courts  apply  to  the 
defendants  the  laws  of  their  own  country.^ 

Foreign  Corporations  in  China.  The  Chinese  law  pro- 
vides for  the  organization  in  China  of  business  corpora- 
tions, but  this  right  is  not  often  availed  of  by  foreigners 
for  the  reason  that  if  they  obtain  charters  from  their  own 
governments  the  corporations  as  juristic  nationals  of 
these  countries  enjoy  in  China  extraterritorial  privileges, 

•Letter  of  the  American  Minister  at  Peking  of  June  16,  1915  to  the 
American  Consul-General  at  Shanghai. 

'  U.  8.  For.  Rels.,  1905,  pp.  169,  et  seq.    See  cmte  p.  171,  note  1. 

'As  to  advice  regarding  this  matter  as  well  as  generally  the  conduct  of 
business  in  China,  see  the  pamphlet  "  The  Conduct  of  Business  in  China  '* 
issued  in  1919  by  the  Bureau  of  Foreign  and  Domestic  Commerce  of  the 
United  States  Department  of  Commerce  (Miscellaneous  Series,  No.  70). 


182      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

that  is,  they  can  be  sued  only  in  their  respective  consular 
courts.  Hongkong  has  its  own  corporation  laws  which 
are  greatly  used  for  the  organization  of  companies  doing 
business  in  China.® 

The  Chinese  corporation  law  does  not  discriminate 
against  foreigners  except  in  the  case  of  mining  enter- 
prises. It  is  required,  in  these  enterprises,  that  one-half 
of  the  capital  invested  shall  be  of  Chinese  origin. 

Foreign  corporations,  of  course,  enjoy  no  greater 
rights  than  "  natural  persons  "  as  regards  landholding 
and  carrying  on  business  outside  of  the  Treaty  Ports. 

American  corporations  intending  to  do  business  in 
China  are  recommended  to  register  with  the  nearest 
American  consul.  As  a  condition  upon  which  such  regis- 
tration win  be  accorded,  the  applicants  are  required  to 
show,  to  the  satisfaction  of  the  consul,  that  a  substantial 
American  financial  interest  is  involved,  that  the  corpora- 
tion maintains  an  American  officer  or  agent  in  China,  and 
that  a  partnership  is  represented  in  China  by  an  Ajneri- 
can  partner  or  agent  for  the  purpose  of  service  of  judi- 
cial process.  It  is  also  required  that  the  applicant  should 
furnish  an  authenticated  copy  of  the  articles  of  incorpo- 
ration, and  a  statement  under  oath,  showing  the  names, 
nationality,  and  residence  of  the  officers,  directors  and 
stockholders,  and  the  extent  of  their  respective  interests. 
In  the  case  of  a  partnership,  the  articles  of  partnership 
agreement  are  to  be  furnished,  and  a  sworn  statement  of 
the  names,  nationality,  residence  and  financial  interests 

•For  the  text  of  the  "China  (Companies)  Order  in  Council,"  of  Novem- 
ber 30,  1915  of  the  British  Government  regulating  the  granting  of  Hong 
Kong  charters,  especially  with  reference  to  foreign  interests  therein,  see 
Ohma  Year  Book,  1919,  pp.  647-651.  See  infra  for  the  Revised  Regula- 
tions of  1919. 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.      183 

of  the  partners.  It  is  recommended  that  this  registration 
be  annually  renewed.  This  fact  of  registration  does  not 
operate  as  conclusive  evidence  that  the  corporation  is  an 
American  chartered  company,  and  does  not  carry  with  it 
the  implication  that  the  concern  is  necessarily  entitled  to 
diplomatic  protection  or  intervention  on  the  part  of  the 
American  Government. 

Acting  under  direction  from  the  American  Legation, 
American  consuls  have  been  directed  to  refuse  registra- 
tion in  cases  in  which  it  does  not  appear  that  substantial 
Amerioan  financial  interests  are  involved  or  that  an 
American  officer  of  the  company  resides  in  China. 

It  is  usual  to  file  in  the  office  of  the  American  Legation 
the  articles  of  incorporation  of  American  chartered  com- 
panies doing  business  in  China.  The  American  companies 
usually  secure  charters  under  the  laws  of  one  of  the 
States  of  the  Union.  It  has,  however,  been  held  by  the 
United  States  Court  for  China  that  they  may  incorporate 
under  the  provisions  of  the  Act  of  Congress  of  March  2, 
1903,  in  amendment  to  the  civil  code  of  the  Territory  of 
AJaska,  providing  for  the  incorporation  of  companies.^" 

As  regards  the  legal  and  diplomatic  protection  which 
the  American  Government  will  give  to  business  com- 
panies possessing  American  charters  and  doing  business 
in  China,  but  which  in  fact  represent  foreign  financial  or 
commercial  interests,  we  can,  perhaps,  do  no  better  than 
make  the  following  excerpts  from  a  letter  of  instruc- 
tions sent,  April  15,- 1910,  by  the  American  Secretary  of 
State  to  the  Aonerican  Legation  at  Peking  to  be  sent  to 
the  various  American  consulates  in  China.^^ 

"  F.  J.  Kaven  et  al.  v.  Paul  McRae,  Millard's  Review,  January  31,  1920. 
"17.  8.  For.  Rels.,  1910,  p.  197. 


184      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  the  question  of  the  status  which  would  be  given  in  China  to 
American  corporations  whose  stockholders  are  mainly  foreigners 
there  appear  to  be  two  distinct  elements : 

(a)  The  right  which  such  corporations  might  have  to  diplomatic 
protection  or  intervention  of  this  Government. 

(6)  The  right  which  such  corporations  might  have  to  the  status 
of  an  American  citizen  in  matters  of  litigation  before  the  United 
States  Consular  Courts  of  China  and  before  the  United  States 
Court  for  China. 

As  to  the  j&rst  point,  the  American  Secretary  said  that 
no  citizen  had  an  absolute  and  inherent  right  enforceable 
in  the  courts  to  the  protection  or  the  intervention  of  his 
Government  and  that,  therefore,  the  Department  of  State 
might  make  such  rules  and  regulations  as  it  might  see  fit 
with  regard  to  the  status  of  American  corporations  in 
foreign  countries  and  the  intervention  in  their  behalf  by 
the  American  Government.  However,  in  framing  such 
rules  it  might  be  found  to  be  to  the  advantage  of  the 
United  States  fully  to  recognize  and  protect  in  China  all 
corporations  organized  under  American  law  irrespective 
of  the  question  as  to  whether  the  stockholders  or  a 
majority  of  them  were  or  were  not  citizens  of  the  United 
States. 

As  to  the  second  point,  it  appears,  as  a  legal  propo- 
sition, that  aU  corporations  possessing  an  American 
charter  are  citizens  of  the  United  States  and  therefore 
subject  to  be  sued  only  in  the  American  courts  in  China — 
and  this  without  regard  to  the  nationality  of  the  stock- 
holders. This  holding  would  apply  to  companies  organ- 
ized under  the  laws  of  the  Philippine  Islands  or  other 
insular  possessions  of  the  United  States. 

The  communication  goes  on  to  say  that  though  all 
American  chartered  corporations  are  entitled  to  registra- 


PATENTS,  TRADE  MARKS,  COPYRIGHTS,  ETC.      185 

tion  at  the  American  consulates,  such  registration  does 
not  carry  with  it  the  implication  that  the  United  States 
Government  will  in  all  cases  extend  to  it  its  diplomatic 
protection  or  intervention.  This  would  have  to  be 
determined,  in  each  case,  as  a  matter  of  policy  and 
right,  all  the  attendant  circumstances  being  taken  into 
consideration. 

Foreign  Shareholders  in   Chinese  Corporations.     The 

Chinese  law  of  1904,  relating  to  corporations,  says: 
"  Should  foreigners  make  application  for  shares  in  a 
company  established  by  Chinese  they  must  agree  to 
observe  the  Chinese  Commercial  Laws  as  well  as  the 
Eegulations  of  the  company. '  * 

The  Chinese  Mining  Law  of  1914,  Article  4,  says : 

"Any  subject  of  a  foreign  country  which  has 
concluded  treaties  with  the  Eepublic  of  China  may 
co-operate  with  citizens  of  the  Republic  of  China  in 
securing  the  right  to  mining  enterprises  provided  that 
he  is  willing  to  observe  this  law  and  other  laws  relating 
to  the  subject.  But  the  shares  taken  by  a  foreigner  shall 
not  exceed  one-half  of  the  whole  number. ' ' 

The  American  Government  in  practice  has  not  been 
disposed  to  grant  special  protection  to  its  nationals 
investing  in  the  shares  of  Chinese  companies — not  even 
when  they  own  the  majority  of  such  shares  and  there 
appears  to  be  official  action  on  the  part  of  the  Chinese 
discriminating  against  the  companies  concerned.  In  all 
cases,  however,  actual  or  vested  property  rights  of  Amer- 
icans will  be  protected. 

It  may  be  observed  that  neither  of  the  Chinese  laws 
above  referred  to  have  been  accepted  by  the  Treaty 


186      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Powers  as  applicable  to  their  respective  nationals.  This 
is  of  no  great  significance  as  regards  the  law  of  corpor- 
ations, but  is  important  as  regards  the  mining  laws  of 
China,  since  China  has,  by  treaties,  undertaken  to  enact 
suitable  laws  which  make  provision  for  mining  develop- 
ment with  the  assistance  of  foreign  capital.  And,  with 
reference  to  this  matter  of  mining  it  is  worthy  of  note 
that  when  foreign  capital  has  been  invested  in  Chinese 
corporations  for  mining  or  other  purposes,  a  frequent 
practice  has  been  to  embody  in  contracts  to  which  the 
Ministry  of  Agriculture  and  Commerce  is  a  party  the 
essential  terms  of  operations  of  the  corporation.  These 
contracts  thus  form,  as  it  were,  special  charters  for  the 
corporations. 

The  right  of  nationals  of  the  Treaty  Powers  to  hold 
stock  in  Chinese  corporations  is  secured  in  the  Anglo- 
Chinese  Treaty  of  1902,  and  the  Sino-Japanese  Treaty 
of  1903.  Overruling  the  Viceroy  of  Kiangsu  Province, 
the  Chinese  Board  of  Agriculture,  Works  and  Commerce 
held,  in  1906,  that  this  right  applied  to  Chinese  com- 
panies outside  of,  as  well  as  within  the  Treaty  Ports. 

The  Chinese  law  recognizes  the  corporation  as  an  en- 
tity, and,  therefore,  when  a  Chinese  corporation  is  sued, 
the  jurisdiction  is  in  the  Chinese  courts.  When  it  ap- 
pears as  plaintiff,  the  jurisdiction  is  in  the  foreign  con- 
sular courts,  but  the  Chinese  law  of  corporations  is  often 
applied;  not,  however,  in  the  sense  that  the  foreign  law 
is  wholly  replaced,  but  that,  in  some  matters,  there  has 
been  an  implied  contract  to  observe  the  Chinese  law. 

Article  IV  of  the  Anglo-Chinese  Treaty  of  1902  pro- 
vides as  follows: 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.      187 

Whereas  questions  have  arisen  in  the  past  concerning  the  right 
of  Chinese  subjects  to  invest  money  in  non-Chinese  enterprises  and 
companies,  and  whereas  it  is  a  matter  of  common  knowledge  that 
large  sums  of  Chinese  capital  are  so  invested,  China  hereby  agrees 
to  recognize  the  legality  of  all  such  investments  past,  present,  and 
future. 

It  being,  moreover,  of  the  utmost  importance  that  all  share- 
holders in  a  joint-stock  company  should  stand  on  a  footing  of 
perfect  equality  as  far  as  mutual  obligations  are  concerned,  China 
further  agrees  that  Chinese  subjects  who  have  or  may  become  share- 
holders in  any  British  joint-stock  company  shall  be  held  to  have 
accepted,  by  the  very  act  of  becoming  share-holders,  the  charter  of 
incorporation  or  memorandum  and  articles  of  association  of  such 
company  and  regulations  framed  thereunder  as  interpreted  by 
British  courts,  and  that  Chinese  courts  shall  enforce  compliance 
therewith  by  such  Chinese  share-holders,  if  a  suit  to  that  effect  be 
entered,  provided  always  that  their  liability  shall  not  be  other  or 
greater  than  that  of  British  share-holders  in  the  same  company. 

Similarly  the  British  Government  agree  that  British  subjects 
investing  in  Chinese  companies  shall  be  under  the  same  obligation.^^ 

Taxation  of  Corporations.  The  Chinese  Governmeiit 
does  not  tax  corporations  as  such,  but,  by  Article  IV  of 
the  Sino-American  Treaty  of  1903  has  reserved  the  right 
to  levy  a  tax  on  foreign  corporations  doing  business  in 
China.^^  China  imposes  no  income  tax  either  on  indi- 
viduals or  on  corporations.  However,  outside  of  Treaty 
OPorts,  if  foreign  corporations  maintain  any  establish- 
ments, a  kind  of  tax  or  royalty,  termed  *  *  pao-hao  ' '  is 
levied. 

"MacMurray,  No.  1902/7.  See  Borchard,  The  Diplomatic  Protection  of 
Citizens  Abroad,  277-282  as  to  the  international  status  of  corporations 
chartered  by  one  State  in  which  a  considerable  portion  of  the  financial 
interest  is  in  citizens  of  other  States. 

"  MacMurray,  1903/5.  This  saving  clause  is  as  follows :  "  Nothing  in 
this  Article  is  intended  to  interfere  with  the  inherent  right  of  China  to 
levy  such  other  taxes  as  are  not  in  conflict  with  its  provisions." 


188      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Proposed  American  Law.  At  the  present  time  there 
is  pending  in  the  American  Congress  a  Bill  to  authorize 
the  granting  of  charters  by  the  National  Government  of 
the  United  States  to  companies  desiring  to  carry  on  any 
lawfnl  business  exclusively  in  countries  outside  of  the 
United  States  or  in  which  the  United  States  exercises 
extraterritorial  jurisdiction.  This  law,  though  general 
in  its  application,  is  designed  to  meet  especially  the  needs 
which  American  merchants  and  investors  in  China  have 
felt.  In  fact  the  Bill  was  prepared  by  the  American 
Chamber  of  Commerce  in  China.^* 

Upon  this  point  may  be  quoted  the  following  from 
Arnold's  Commercial  Handbook  of  China.^^ 

*  *  Under  present  American  laws  there  is  no  machinery 
for  incorporating  companies  for  the  special  purpose  of 
foreign  trade,  and  companies  organized  for  this  special 
purpose  are  compelled  to  incorporate  under  the  laws  of 
the  various  States  [of  the  American  Union],  with  their 
varying  and  often  conflicting  regulations.  To  quote  the 
comment  of  one  of  the  most  widely  circulated  American 
periodicals,  *  the  Chinese  do  not  know  anything  in  par- 
ticular about  New  Jersey,  Delaware,  New  York,  and  so 
on.  Their  lawyers  tell  them  that  the  United  States  has 
nothing  in  particular  to  do  with  these  corporations,  that 
they  are  the  creatures  of  the  various  States;  that  the 
provisions  of  a  given  charter  may  be  lawful  in  one  State 
and  unlawful  in  another.     The  Chinese  .  .  .  turn  to  a 

"  In  cooperation  with  Hon.  Charles  Denby  of  the  United  States  War 
Trade  Board,  who  conducted  for  the  Government  a  special  investigation  of 
trade  conditions  in  China. 

"Volxime  Two.  This  work  was  prepared  for  the  Bureau  of  Foreign 
and  Domestic  Commerce  of  the  Department  of  Commerce  of  the  United 
States,  and  published  in  1920  at  the  Government  Printing  OflBce. 


PATENTS,  TEADE  MAEKS,  COPYEIGHTS,  ETC.   189 

company   whose    charter    bears    the    seal    of   a   great 
nation."^® 

Revised  Regulations  of  1919  Affecting  the  British  Com- 
panies Act.  These  new  regulations  adopted  on  October 
9,  1919,  provide  that: 

1.  No  person  other  than  a  British  subject  resident  within  the 
limits  of  this  Order,  shall  act  as  managing  director  or  in  any  posi- 
tion similar  to  that  of  managing  director,  or  shall  otherwise  exercise 
general  or  substantial  control  of  the  business  of  a  China  Company. 

2.  If  default  is  made  in  compHance  with  this  article  the  Com- 
pany shall  be  liable  to  a  fine  not  exceeding  $50  for  every  day  during 
which  the  default  continues,  and  every  director  and  every  manager 
of  the  Company  who  knowingly  authorizes  or  permits  the  default 
shall  be  hable  to  the  like  penalty. 

3.  Failure  to  comply  with  the  provisions  of  this  article  shall  be 
a  ground  upon  which  an  order  for  winding  up  the  Company  may 
be  made  by  the  Court. 

4.  This  article-  shall  come  into  force  sixty  days  after  the  pub- 
lication of  this  order. 

Millard's  Review  (January  3,  1920)  after  quoting  this 
text  has  the  following  editorial  comment  which  is  worthy 
of  reproduction: 


"As  has  been  said  above,  very  many  of  the  corporations  operating  in 
China  have  obtained  their  charters  under  the  Hongkong  Companies 
Ordinance.  In  many  cases  the  capital  invested  is  mainly  Chinese  or  of 
other  nations.  "As  a  matter  of  fact,"  says  the  New  York  Journal  of 
Commerce  (quoted  by  Arnold)  "Americans  who  wish  to  invite  the  capital 
of  Chinese  and  other  nationalities  are  compelled  to  resort  to  the  laws  of 
England  to  do  their  business  in  a  corporate  capacity  in  China.  They  thus 
submit  themselves  to  English  jurisdiction  and  become  in  their  corporate 
capacity,  British  subjects,  imder  the  control  of  Britsh  courts  and  consular 
authorities.  Their  business,  moreover,  figures  as  an  asset  of  Great  Britain 
in  the  commimities  in  which  they  may  be  established." 


190      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

It  is  well  known  that  in  the  past  a  number  of  companies  having 
a  merely  nominal,  if  indeed  any  British  interest,  were  registered 
under  the  Hongkong  Ordinances.  From  time  to  time  the  incon- 
venience of  this  was  shown  by  the  fact  that  while  the  British  Court 
had  jurisdiction  over  the  company  as  such,  it  had  none  over  its 
personnel,  as  in  some  cases  where  there  were  no  British  directors. 
Subsequently,  when  local  registration  of  China  Companies  was 
permitted,  it  was  enacted  that  the  majority  of  the  directors  should 
be  British,  but  this  did  not  always  meet  the  case  in  the  least,  as  it 
was  always  possible  to  put  in  figureheads  as  directors,  who  had 
actually  no  control  and  little  real  interest.  The  present  legislation 
makes  it  certain  that  in  British  companies,  real  British  interests 
and  control  will  predominate. 

The  Chief  companies  in  Shanghai  containing  an  American  inter- 
est that  are  affected  by  this  act  are  in  the  following  lines;  life 
insurance,  real-estate,  hotels,  shipping,  manufacturing  and  lumber. 
Although  their  number  is  not  large,  their  :business  in  China  is 
extensive,  in  some  cases  the  most  extensive  in  China.  In  addition 
to  companies  having  an  American  interest  there  are  hundreds  of 
Chinese  companies  that  are  affected,  among  them  being  large  de- 
partment stores,  some  banks,  and  other  lines.  From  the  standpoint 
of  the  Chinese  companies  it  will  be  comparatively  simple  to  comply 
with  the  law.  They  will  either  re-incorporate  as  purely  Chinese 
corporations  under  the  Ministry  of  Agriculture  and  Commerce  at 
Peking,  or  will  install  a  Chinese  of  British  nationality  as  managing 
director.  There  are  himdreds  of  Chinese  business  men  who  are 
British  subjects  through  residence  in  Hongkong  and  it  will  not  be 
difficult  to  find  willing  subjects  to  accept  new  positions  created  by 
this  law.  It  is  believed  in  many  quarters  that  the  British  govern- 
ment had  these  Chinese  Companies  in  mind  when  the  enactment 
was  passed.  There  Chinese  firms  are  scattered  all  over  tiie  country 
and  the  problem  of  protecting  them  has  been  a  difficult  one  for  the 
British  government.  This  has  been  especially  true  in  the  last  few 
years  because  of  the  political  troubles  in  China.  Furthermore  the 
very  act  of  protecting  these  firms  has  caused  the  British  govern- 
ment no  little  embarrassment,  for  the  firms  are  practically  all  of 
pure  Chinese  capital  and  management.  An  example  in  hand  is  the 
present  Chinese  boycott  against  Japanese  goods. 


PATENTS,  TEADE  MARKS,  COPYRIGHTS,  ETC.      191 

It  appears  that  the  American  Chamber  of  Commerce 
of  China  and  the  American  Association  of  China  pro- 
tested against  these  new  British  regulations  as  anti- 
American  in  purpose.  In  the  light  of  what  has  been  said, 
however,  the  editor  of  Millard's  Weekly  is  of  opinion 
that  this  interpretation  is  a  false  one — ^that  there  were 
good  and  sufficient  grounds  for  the  legislation  and  that 
in  enacting  it  the  British  government  had  no  special 
nationality  in  view. 


CHAPTER  VI 
Landhoij)ing  by  Foeeignees  in  China 


The  rights  of  foreigners  to  lease  or  acquire  title  to  land 
in  China  have  incidentally  been  set  forth  in  the  treaty 
provisions  which  have  been  elsewhere  quoted  in  connec- 
tion with  the  larger  subjects  of  extraterritoriality  and  the 
rights  of  commerce  and  trade.  It  will  be  worth  while, 
however,  even  at  the  risk  of  some  repetition,  to  consider 
this  subject  specifically,  although  briefly. 

The  special  rights  possessed  or  enjoyed  by  missiona- 
ries with  respect  to  land  holding  will  receive  considera- 
tion in  a  later  section  of  this  chapter. 

Landholding  in  the  foreign  **  settlements  *'  or  **  con- 
cessions '*  will  receive  consideration  in  the  section  deal- 
ing with  the  legal  status  and  administration  of  those 
areas. 

By  Article  XII  of  the  American  Treaty  of  1858  it  was 
provided  that : 

Citizens  of  the  ITnited  States,  residing  or  sojourning  at  any  of 
the  ports  open  to  foreign  commerce,  shall  be  permitted  to  rent 
houses  and  places  of  business,  or  hire  sites  on  which  they  can  them- 
selves build  houses  or  hospitals,  churches  and  cemeteries.  The 
parties  interested  can  fix  the  rent  by  mutual  and  equitable  agree- 
ment; the  proprietors  shall  not  demand  an  exorbitant  price,  nor 
shaU  the  local  authorities  interfere,  unless  there  be  some  objections 
offered  on  the  part  of  the  inhabitants  respecting  the  place.  The 
legal  fees  to  the  oflBcers  for  applying  their  seal  shall  be  paid.  The 
citizens  of  the  United  States  shall  not  unreasonably  insist  on  par- 
ticular spots,  but  each  party  shall  conduct  with  justice  and  modera- 

192 


LANDHOLDING  BY  FOEEIGNEES  193 

tion.    Any  desecration  of  the  cemeteries  by  natives  of  China  shall 
be  severely  punished  according  to  law. 

By  Article  XII  of  the  Sino-British  Treaty  of  1858  it 
was  provided  that: 

British  subjects,  whether  at  the  Ports  or  at  other  places,  desiring 
to  build  or  open  houses,  warehouses,  churches,  hospitals  or  burial 
grounds,  shall  make  their  agreement  for  land  or  buildings  they 
require  at  the  rates  prevailing  among  the  people,  equitably  and 
without  exaction  on  either  side. 

The  italicized  words  **  or  at  other  places  "  the  British 
have  construed  as  meaning  only  places  near  the  open 
ports. 

At  times  some  tronble  has  arisen  by  reason  of  the 
resistance  of  local  authorities  to  the  acquiring  of  lands 
by  foreigners,  missionaries  and  others,  at  places  where 
they  have  had,  under  treaty,  the  right  to  acquire  lands. 
In  general  it  has  been  recognized  by  foreigners,  and 
especially  by  the  missionaries,  that  deference  should  be 
paid  to  local  objections  that  have  any  reasonable  basis. 
At  times  the  Chiuese  authorities  have  argued  that  the 
objection  of  a  single  person  in  a  community  furnished 
adequate  grounds  for  refusing  permission  to  a  foreigner 
to  acquire  land  and  to  build  thereupon.  This  position 
has  been  deemed  an  unreasonable  one  and  as  working  a 
virtual  nullification  of  the  treaty  right.^ 

*See,  for  example,  U.  8.  For.  Bels.,  1893,  pp.  230-231.  In  this  case  the 
Chinese  Bureau  of  Foreign  Affairs  at  Nanking  had  served  notice  upon  the 
American  Consul  that  'henceforth,  when  misaionaries  or  other  citizens  of 
the  United  States  desire  to  acquire  land  or  houses,  no  matter  where,  they 
must  first  meet  the  gentry  and  elders  of  the  place  and  agree  with  them 
and  then  report  to  the  Bureau  and  local  officials  for  an  official  survey  of 
the  ground.  On  its  being  found  that  the  feng  ahui  (geomantic  require- 
ment) of  the  neighborhood  is  not  prejudiced,  the  execution  of  the  convey- 
13 


194      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

In  1911  the  American  Charge  wrote  to  the  Consul- 
General  at  Tientsin  that,  in  his  opinion,  foreigners  might 
legally  lease  lands  in  the  immediate  vicinity  of  Tientsin 
or  of  other  open  ports,  even  though  such  lands  were  out- 
side the  bounds  of  the  foreign  *'  Concessions,''  provided 
the  Chinese  local  authorities  gave  their  permission  and 
were  willing  to  register  the  deeds.  Attention  was  called 
to  the  fact  that  in  this  respect,  the  provisions  of  the  Sino- 
American  Treaty  of  1903  were  not  as  liberal  as  those  of 
the  treaties  with  Great  Britain,  which  do  not  specifically 
restrict  the  leasing  of  lands  by  Britishers  to  places  set 
apart  in  the  ports  for  use  and  occupation  by  foreigners ; 
but  that,  of  course,  under  the  most  favored  nation  prin- 
ciple, Americans  were  entitled  to  the  same  rights  as  those 
granted  to  the  subjects  of  Great  Britain.  It  was  declared 
that  the  practice  was  general  upon  the  part  of  the 
Chinese,  to  permit  the  leasing  of  lands  outside  the  "  Con- 
cessions." This  holding  of  the  legation  having  been 
submitted  to  the  authorities  at  Washington,  the  following 
ruling  was  issued :  *  *  Where  the  acquisition  of  land  by 
foreigners  outside  of  the  several  treaty  ports  is  a  matter 

ance  will  be  ordered,  and  the  official  tax  receipt  and  title  deed  will  be 
sealed  and  forwarded  through  this  Bureau  to  your  oonsTilate  for  delivery." 
To  this  the  American  minister  objected,  declaring,  as  he  wrote  to  his  gov- 
ernment at  Washington:  "This  clause  introduces  a  new  element  in  the 
mode  of  acquiring  land.  Article  XII  of  the  Treaty  of  1858  does  not 
require  that  citizens  of  the  United  States  desiring  to  purchase  land  shall 
submit  the  question  to  the  decision  of  the  gentry  and  elders.  .  .  .  The 
clause  above  quoted  from  the  communication  of  the  Taotai  is  so  distinctly 
antagonistic  to  the  above  quoted  article  of  the  treaty  that  I  have  directed 
Mr.  Charles  to  notify  the  Taotai  that  it  will  not  be  acquiesced  in  or  acted 
on  by  this  legation." 

With  regard  to  unreasonable  difficulties  placed  by  the  Chinese  in  the 
way  of  the  sale  or  transfer  of  real  estate  owned  by  foreigners,  see  also 
V.  8.  For.  ReU.,  1889,  p.  72. 


LANDHOLDING  BY  FOEEIGNERS  195 

of  permission  and  usage,  fortified  by  long  observance  and 
generally  claimed  for  and  conceded  to  the  citizens  or 
subjects  of  other  nations,  this  Government  would  be  also 
disposed  to  hold  that  deeds  for  such  lands  presented  by 
American  citizens  might  properly  be  registered  at  the 
respective  consulates. ' '  ^ 

Modes  of  Acquiring  Titles.  The  formalities  and  modes 
of  acquiring  titles  to  real  estate  by  foreigners  were  con- 
sidered in  a  letter  of  American  Minister  Denby  in  reply 
to  a  series  of  questions  that  had  been  propounded  to  h\m 
by  the  Treasurer  of  the  Central  China  Mission.^ 

From  this  letter  we  quote  the  following : 

British  consuls  issue  title  deeds  only  for  land  situated  within 
the  hmits  of  British  Concessions.  AU  title  deeds  to  property  sit- 
uated outside  of  these  concessions  are  issued  by  the  Chinese  authori- 
ties. The  consuls  of  the  United  States  have  no  authority  to  issue 
title  deeds  to  real  estate  in  China.  Printed  forms  of  deeds  with  an 
EngUsh  translation,  such  as  are  issued  by  the  Taotai  at  Shanghai, 
are  obtained  at  the  consulate-general,  but  they  are  only  available  for 
property  within  the  jurisdiction  of  the  said  Taotai.  .  .  . 

The  twelfth  article  of  the  treaty  of  1858  provides  certain  condi- 
tions which  may  be  held  to  be  conditions  precedent  to  the  acquisi- 
tions of  land.  Among  them  is  this:  That  the  legal  fees  to  the 
officers  for  applying  their  seals  shall  be  paid.  In  the  United  States 
a  deed  would  be  good  inter  partes,  at  least  by  estoppel,  without 
acknowledgment  witnessed  by  a  notarial  seal.  .  .  .  Whether,  under 
certain  circumstances,  a  court  might  hold  that  title  passed  without 
the  deed  being  sealed  and  stamped  by  the  Chinese  authorities  I 
cannot  imdertake  to  say.  But  it  may  be  said  with  positiveness,  .  .  . 
that  the  want  of  a  seal  would  create  difficulty  and  confusion.    Prima 

*  U.  8.  For.  Rels.,  1911,  pp.  82-83. 
» V.  8.  For.  Rels.,  1888,  Pt.  I,  p.  272. 


196      FOEEIGN  EIGHTS  AND  IISTTEEESTS  IN  CHINA 

facie,  there  is  no  consummated  legal  transfer  until  the  seal  has 
been  aflSxed.  .  .  . 

The  practice  at  Shanghai  is  for  the  Taotai  to  stamp  all  deeds. 
In  addition  a  note  is  made  on  the  deed  over  the  consul-general's 
signature  and  seal. 

I  believe  that  the  rule  in  China  is,  when  a  native  offers  to  sell 
his  land  he  must  produce  the  original  or  old  title  deeds.  These  are 
examined  and  compared  with  the  record  of  titles  in  the  magistrate's 
office  before  the  sale  can  be  made. 

When  land  is  mortgaged  an  indorsement  setting  out  the  mort- 
gage is  generally  made  on  the  deeds,  and  the  deeds  are  then  handed 
to  the  mortgagee  to  be  held  by  him  as  security  for  his  lien.  .  .  . 

At  Shanghai  an  indorsement  of  the  transfer  (of  lands)  is  made 
on  the  title  deeds  in  Chinese  and  English,  and  is  duly  stamped  by 
the  Taotai.  A  record  of  the  transfer  is  kept  in  the  register  of  land 
transfers.  Three  copies  of  the  deed  are  made :  one  is  retained  by 
the  Taotai,  one  given  to  the  vendee,  and  one  is  filed  by  the  consul- 
general. 

Landholding  in  Manchuria.  In  Sonth  Manchuria  the 
rights  of  foreigners  with  regard  to  acquiring  interests  in 
land  are  broader  territorially,  that  is,  outside  of  the 
Treaty  Ports,  than  they  are  in  other  portions  of  China. 
This  is  due  to  the  Sino- Japanese  treaty  of  1915,  the  perti- 
nent provision  of  which  reads  as  follows : 

Japanese  subjects  in  South  Manchuria  may,  by  negotiation,  lease 
land  necessary  for  erecting  suitable  buildings  for  trade  and  manu- 
facture or  for  prosecuting  agricultural  enterprises. 

Japanese  subjects  shall  be  free  to  reside  and  travel  in  South 
Manchuria  and  to  engage  in  business  and  manufacture  of  any  kind 
whatsoever. 

These  rights,  by  the  favored  nation  principle  have,  of 
course,  become  available  to  the  nationals  of  all  the  other 
Treaty  Powers. 


LANDHOLDING  BY  FOREIGNERS  197 

Missionaries  in  China.  The  treaty  privileges  of  mis- 
sionaries in  China  are  broader  in  some  respects  than 
those  of  other  persons  and  they  therefore  deserve  special 
description. 

The  questions  which  have  arisen  between  China  and 
the  Treaty  Powers  with  regard  to  missionaries  have,  in 
the  main,  centered  around  the  following  points :  (1)  their 
freedom  to  teach;  (2)  their  right  to  reside  and  work  in 
the  "  interior,*'  that  is,  away  from  the  Treaty  Ports; 
and  (3)  the  status  of  native  converts  to  Christianity. 

Although  missionary  work  in  China  dates  from  a  much 
earlier  period,  the  first  treaty  mention  of  it  is  in  the 
British  and  American  treaties  of  1858.  In  the  American 
treaty  of  that  year  Article  XXTX  declared: 

The  principles  of  the  Christian  rehgion,  as  professed  by  the  Prot- 
estant and  Roman  CathoHc  Churches,  are  recognized  as  teaching 
men  to  do  good,  and  to  do  to  others  as  they  would  have  others  do  to 
them.  Hereafter,  those  who  quietly  profess  and  teach  these  doc- 
trines shall  not  be  harassed  or  persecuted  on  account  of  their  faith. 
Any  persons,  whether  citizens  of  the  United  States  or  Chinese  con- 
verts, who  according  to  these  tenets  teach  and  practice  the  principles 
of  Christianity,  shall  in  no  case  be  interfered  with  or  molested. 

The  corresponding  provision  in  the  British  treaty  is  in 
substantially  the  same  words. 

In  1860  an  imperial  edict  was  issued  commanding  local 
officials  throughout  the  empire  "  in  every  case  affecting 
Christians  *  to  investigate  thoroughly  and  decide  justly.*' 

In  1862  a  more  comprehensive  order,  accompanied  by 
explanations,  was  issued  by  Prince  Kung,  the  chief  min- 
ister for  foreign  affairs  in  which  he  gave  instructions 
that  though  Christians  [converts]  were,  in  general,  to 

*In  thi8  case  the  reference  was  to  Roman  Catholics. 


198      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

pay  the  same  taxes  as  non-Christians,  they  were  not  to  be 
compelled  to  contribute  for  the  building  and  repair  of 
temples,  for  idol  processions,  and  plays,  etc. 

In  the  Burlingame  treaty  of  1868  with  the  United 
States,  Article  IV  provided: 

The  twenty-ninth  article  of  the  treaty  of  the  eighteenth  of  June, 
1858,  having  stipulated  for  the  exemption  of  Christian  citizens  of 
the  United  States  and  Chinese  converts  from  persecutions  in  China 
on  account  of  their  faith,  it  is  further  agreed  that  citizens  of  the 
United  States  in  China  of  every  religious  persuasion,  and  Chinese 
subjects  in  the  United  States  shall  enjoy  entire  liberty  of  conscience, 
and  shall  be  exempt  from  all  disabihty  or  persecution  on  account  of 
their  rehgious  faith  or  worship  in  either  country.  Cemeteries  for 
sepulture  of  the  dead,  of  whatever  nativity  or  nationahty,  shall  be 
held  in  respect  and  free  from  disturbance  or  profanation. 

The  right  generally  of  foreigners,  to  lease  or  acquire 
title  to  lands  and  buildings  in  China,  has  been  treated 
in  the  preceding  section,  and  it  here  remains  to  discuss 
only  the  special  and  additional  rights  which  missionaries 
possess  or  have  been  permitted  to  enjoy  in  China  with 
reference  to  real  estate. 

In  the  Chinese  version  of  the  French  treaty  of  1860 
are  to  be  found  the  words  *'  and  it  shall  be  lawful  for 
French  missionaries  in  any  of  the  provinces  to  lease  or 
buy  land  and  build  houses."  But  these  words  are  not 
found  in  the  French  text,  and,  as  it  is  expressly  stipu- 
lated that  the  French  text  shall  be  the  authoritative  one, 
no  claims  have  ever  been  founded  upon  the  words  in 
question.'' 

•  The  Chinese  claim  that  the  words  were  surreptitiously  introduced  into 
the  Chinese  text.  Just  how  they  came  to  have  a  place  there  has  never 
been  determined. 


LANDHOLDING  BY  FOEEIGNEES  190 

Missionaries  in  the  Interior.  Despite  the  absence  of 
express  treaty  pemussion,  Christian  missionaries  of  all 
nationalities  have  been  permitted  by  the  Chinese  authori- 
ties to  establish  themselves  in  many  places  throughout 
the  Empire  far  from  treaty  ports  and  there  to  acquire 
lands  and  construct  buildings  for  use  as  residences,  hos- 
pitals, schools,  churches,  etc.  Thus  not  only  have  vested 
property  rights  been  created,  but  the  question  has  been 
raised  whether  there  has  not  been  created  a  custom  which 
may  be  appealed  to  under  the  most  favored  nation  clause 
when  permission  is  sought  of  the  Chinese  authorities  to 
establish  a  new  station. 

Upon  this  point  we  can  do  no  better  than  to  quote  the 
view  of  American  Minister  Denby.^  Writing  in  1888, 
he  says : 

Leaving  the  treaties  out  of  consideration,  what,  then,  is  a  fair 
conclusion  from  the  actual  condition  of  things  in  China? 

It  would  seem  to  be  this:  The  Imperial  Government  leaves  the 
question  of  permanent  residence  to  be  solved  by  the  local  authori- 
ties and  the  people.  If  the  foreigner  can  procure  toleration  in  any 
loeahty,  and  is  suffered  without  objection  to  locate  therein,  he,  by 
degrees,  may  acquire  vested  rights,  which  his  own  government  and 
the  Imperial  Government  also  are  bound  to  secure  to  him  if  at- 
tacked. If  the  foreigner  is  unable  by  tact  and  prudence  to  concihate 
the  natives  so  as  to  secure  a  permanent  residence,  he  is  not  strictly 
entitled  to  demand  either  of  his  own  government  or  the  Imperial 
Government  insistence  on  a  claim  which  has  no  treaty  basis. 

It  is  claimed,  however,  that  the  rights  granted  under  the  treaties 
have  been  enlarged  by  the  usage  and  tolerance  of  the  Chinese  Gov- 
ernment, and  by  special  acts,  whereby  pecuhar  rights  and  privileges 
in  certain  localities  have  inured  to  certain  foreigners,  and  under 
the  favored  nation  clause,  similar  rights  will  be  claimed  for  citizens 
of  the  United  States. 

•  17.  8.  For.  Rels.,  1888,  Pt.  i,  p.  271. 


200      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  Government  of  the  United  States  does  not  undertake  to  con- 
trol its  citizens  in  their  selection  of  residences  at  home  or  abroad. 
They  have  the  right  to  go  where  they  please.  They  will,  while 
traveling  in  foreign  countries,  be  protected  by  the  Government. 

Should  citizens  of  the  United  States  locate  in  the  interior  of 
China,  the  Government  of  the  United  States  could  not,  as  a  matter 
of  treaty  stipulation,  insist  that  they  have  the  right  to  acquire  real 
properi;y,  except  in  localities  where  this  right  has  been  accorded  to 
citizens  or  subjects  of  other  foreign  powers.  In  this  last  case, 
under  the  favored  nation  clause,  exact  equality  should  be  insisted 
upon.  .  .  . 

It  follows  from  what  has  been  written  that  the  citizens  of  the 
United  States  who  underiiake  to  settle  in  the  interior  must  under- 
stand that  they  do  so  without  positive  treaty  sanction.  While  gov- 
ernmental protection  as  to  their  persons  would  follow  them  the 
worid  over,  the  Government  does  not  hold  itseK  bound  to  assist 
them  in  the  prosecution  of  any  business  or  employment  whose  exer- 
cise in  the  given  locality  contravenes  the  usages  or  laws  of  China. 

Treaty  of  1903.  At  last,  in  1903,  ia  the  Siao- American 
treaty  of  that  year,  an  express  treaty  right  was  granted, 
not  to  individuals,  but  to  "  Missionary  societies  "  to  rent 
or  lease  in  perpetuity  lands  and  buildings  for  tbeir  mis- 
sionary purposes  in  all  parts  of  the  Empire.  Article 
XrV  of  that  treaty,  after  repeating  substantially  the  pro- 
vision of  Article  XXIX  of  the  Treaty  of  1858,  provides : 

No  restrictions  shall  be  placed  on  Chinese  joining  Christian 
churches.  Converts  and  non-converts,  being  Chiaese  subjects,  shall 
alike  conform  to  the  laws  of  China,  and  shall  pay  due  respect  to 
those  in  authority,  Hving  together  in  peace  and  amity ;  and  the  fact 
of  being  converi;8  shall  not  protect  them  from  the  consequences  of 
any  offence  they  may  have  committed  before  or  may  commit  after 
their  admission  into  the  church,  or  exempt  them  from  paying  legal 
taxes  levied  on  Chinese  subjects  generally,  except  taxes  levied  and 
contributions  for  the  support  of  religious  customs  and  practices 
contrary  to  their  faith.     Missionaries  shall  not  interfere  with  the 


LANDHOLDING  BY  FOEEIGNEES  201 

exercise  by  the  native  authorities  of  their  jurisdiction  over  Chinese 
subjects;  nor  shall  the  native  authorities  make  any  distinction  be- 
tween converts  and  non-converts,  but  shall  administer  the  laws 
without  partiality  so  that  both  classes  can  live  together  in  peace. 

Missionary  societies  of  the  United  States  shall  be  permitted  to 
rent  and  lease  in  perpetuity,  as  the  property  of  such  societies, 
buildings  or  lands  in  all  parts  of  the  Empire  for  missionary  pur- 
poses, and,  after  the  title  deeds  have  been  found  in  order  and  duly 
stamped  by  the  local  authorities  to  erect  such  suitable  buildings  as 
may  be  required  for  carrying  on  their  good  work. 

**  The  new  stipulations,"  says  Hinckley,  **  cover  the 
principal  missionary  difficulties  that  have  arisen  since 
1850.  ...  It  will  be  observed  that  the  right  of  mission- 
aries to  reside  in  the  interior  is  not  included  in  this 
treaty.  The  omission  may  be  ascribed  to  the  fact  that 
the  privilege  has  long  existed,  the  only  restrictions  npon 
it  being  made  by  the  authorities  in  remote  communities 
where  friendliness  may  not  yet  have  been  manifested."  ^ 
It  may  further  be  observed  that  the  right  regarding  land- 
holding  is  to  lease  in  perpetuity  and  not  to  acquire  a  full 
title. 

It  would  appear  that  in  1865  the  French  had  obtained 
from  China  a  treaty  which  granted  to  French  mission- 
aries the  right  to  purchase  land  and  reside  anywhere  in 
the  interior,  the  deeds  to  lands  to  be  in  the  name  of 
missionary  societies  or  churches.  The  text  of  this  treaty 
has,  however,  never  been  officially  published.  It  has 
nevertheless  been  referred  to  in  official  diplomatic  cor- 
respondence between  the  French  minister  at  Peking  and 
his  government.^    When,  in  1897  the  American  Minister 

^  Americam,  Consular  Jurisdiction  in  the  Orient,  p.  120. 
•  See  Archives  Diplomatiques,  Vol.  Lxvr,  p.  305.     Cf.  article  by  L.  N". 
Richards,  "  The  Rights  of  Foreigners  to  Reside  and  Hold  Land  in  China," 


202      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

asked  that  an  imperial  decree  be  issued  recognizing  the 
right  of  American  missionaries  to  acquire  land  and  re- 
side in  the  interior,  the  Chinese  Government  replied  that 
as  to  the  right  to  reside  this  was  already  provided  for  by 
treaty  and  that  decrees  to  that  effect  had  been  issued ; 
and  that  as  to  obtaining  title  to  lands,  "  while  the  trea- 
ties between  the  United  States  and  China  do  not  provide 
for  this,  still  the  American  missionaries  shall  be  treated 
in  this  matter  the  same  as  French  missionaries."^ 

The  directions  sent  by  the  Chinese  Foreign  Office  to 
the  Viceroys  and  Governors  of  all  the  Provinces,  in 
October,  1894,  read  as  follows: 

''  Hereafter,  if  French  missionaries  go  to  the  interior 
of  the  country  to  purchase  land  and  dwellings,  the  seller 
(insert  the  name)  shall  specify  in  the  drawing-up  of  the 
deed  of  sale  that  his  property  was  sold  to  become  part 
of  the  collective  property  of  the  Catholic  mission  of  the 
place.  It  wiU  be  unnecessary  to  record  the  names  of  the 
missionary  or  of  the  Christians.  The  Catholic  mission, 
after  the  execution  of  the  deed,  wiU  pay  the  registration 
fee  assessed  by  the  law  of  China  on  the  deeds  of  sale 
and  at  the  same  rate.  The  seller  will  not  be  bound  to 
give  notice  to  the  local  authorities  of  his  intention  to  seU 
or  to  apply  for  a  previous  permit." 

With  reference  to  the  phrase  **  the  collective  property 
of  the  Catholic  mission,"  as  used  above,  it  is  of  interest 
to  observe  that  the  Chinese  have  sought  to  have  the  doc- 
trine established  that  the  title  to  the  lands  sold  becomes 
vested  in  the  collectivity  of  the  Chinese  converts,  rather 
than  in  the  legal  entity  of  the  foreign  mission. 

Harvard  Law  Review,  Vol.  xv  (1901-02),  pp.  191-207.    This  French  agree* 
ment  is  sometimes  termed  the  Berthemy  Convention. 
•  U.  8.  For.  Rels.,  1897,  p.  62. 


LANDHOLDING  BY  FOREIGNEES  203 

A  very  general  custom  among  missionaries  in  tlie  inte- 
rior has  been  to  take  the  legal  title  to  lands  in  the  name 
of  Chinese  converts  who  hold  them  in  trust  for  the  mis- 
sionary society.  As  regards  the  legality  as  well  as  the 
expediency  of  this  custom  the  American  Minister  in  1888 
wrote: 

**  The  subject  of  trusts  is  one  of  the  most  dijBficult.  In 
China  it  seems  to  be  usual  with  foreigners,  in  the  interior 
at  least,  to  have  property  conveyed  to  a  trustee  who  exe- 
cutes, as  a  precaution,  a  declaration  of  trust  to  the  cestui 
qui  trust,  which  is  not  recorded.  The  plan  is  probably 
legal.  But  the  better  plan  would,  in  my  opinion,  be  to 
have  the  deed  made  to  the  head  of  the  mission  in  trust 
for  his  society,  or  to  the  society  direct. ' '  ^® 

Status  of  Chinese  Converts  to  Christianity.  The  legal 
status  of  Chinese  converts  to  Christianity  is  a  very 
simple  one  though  it  has,  in  practice,  given  rise  to  a  great 
deal  of  controversy  owing  to  attempts  made  by  the  con- 
verts to  obtain  for  themselves  special  protection  or  im- 
munity from  local  law  and  authorities,  and,  at  times,  to  a 
similar  effort  in  their  behalf  upon  the  part  of  the  foreign 
missionaries. 

As  a  matter  of  treaty  provision  and  of  Chinese  law, 
a  convert  to  Christianity  has  no  extraterritorial  rights 
whatsoever.  He  has  exactly  the  same  status  and  rights 
as  his  unconverted  fellow  nationals.^^     He  is,  however. 


*•  U.  S.  For.  Rels.,  1888,  274,  Quoted  by  L.  N.  Richards  in  his  article, 
"  The  Rights  of  Foreigners  to  Reside  and  Hold  Land  in  China,"  Harvard 
Law  Review,  Vol.  xv  (1901-02),  pp.  191-207. 

"By  Article  V  of  the  German  treaty  of  1861  it  is  provided  that: 

"  Die  Bekenner  und  Lehrer  der  christlichen  Religion  sollen  in  China 


204      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

guaranteed  immunity  from  discrimination  or  oppression 
by  the  Chinese  authorities  on  account  of  his  religion. 
And  yet,  as  an  almost  unavoidable  result  of  human  na- 
ture, the  missionaries  have  been  led  to  interpose  in  behalf 
of  their  converts.  Morse  puts  this  very  well  when  he 
says: 

With  the  reservation  of  the  case  of  persecution  most  missionaries, 
certainly  most  Protestant  missionaries,  generally  accept  this  posi- 
tion ;  but  they  cannot  always  be  trusted  to  temper  zeal  with  discre- 
tion and  to  distinguish  what  is  right  from  what  is  lawful.  In  this 
lies  an  element  of  danger  to  the  missionary  and  to  his  cause.  .  .  . 
When  the  missionary,  many  miles  from  the  observing  eyes  of  his 
Consul,  transfers  a  corner  of  his  protecting  cloak  to  his  poor 
Chinese  convert,  he  may  be  doing  what  is  right,  but  it  is  not  law- 
ful ;  and  this  is  the  naked  fact  underlying  many  an  episode  leading 
to  a  riot.  You  cannot  eradicate  from  a  missionary's  mind  the 
behef  that  a  convert  is  entitled  to  justice  of  a  quality  superior  to 
that  doled  out  to  his  unconverted  brother;  it  could  not  be  got  out 
of  your  mind,  or  out  of  mine  in  a  similar  case.  None  of  us  could 
endure  that  a  protege  of  ours  should  be  haled  away  to  a  filthy 
prison  for  a  debt  he  did  not  owe,  and  kept  there  until  he  had  satis- 
fied, not  perhaps  the  fictitious  creditor,  but  at  least  his  custodians 
who  were  responsible  for  his  safe  keeping.  The  case  is  particularly 
hard  when  the  claim  is  not  for  a  debt,  but  for  a  contribution  to  the 
upkeep  of  the  village  temple — the  throne  of  heathendom — or  of  the 
recurring  friendly  village  feasts  held  in  connection  with  the  temple 
— counterparts  of  Feast  Day  and  Thanksgiving;  and  when  con- 
version drives  its  subject  to  break  off  all  his  family  ties  by  refusing 
to  contribute  to  the  maintenance  of  family  ancestral  worship  and 
the  ancestral  shrine,  the  hardship  is  felt  on  all  sides — ^by  the  mis- 
sionary who  cannot  dechne  to  support  his  weaker  brother  in  his 

voile  Sicherheit  flir  ihre  Personen,  ihr  Eigenthum  und  die  Austibung  ihrer 
Religion8-€rebrM.uche  geniessen." 

Morse,  however,  points  out,  that  this  very  broad  language  was  not 
intended  to  remove,  and  has  not  been  construed  as  removing,  converts 
from  the  jurisdiction  of  their  own  laws  and  courts.  Trade  and  Adminis- 
tration of  China,  p.  197. 


LANDHOLDING  BY  FOREIGNEES  206 

struggle  against  the  snares  of  the  devil;  by  the  convert,  who  is 
divided  between  his  allegiance  to  his  new  faith  and  the  old  beliefs 
which  made  all  that  was  holy  in  his  former  life ;  by  the  family,  who 
not  only  regard  their  recreant  member  as  an  apostate  but  are  also 
compelled  to  maintain  the  old  worship  with  reduced  assessments 
from  reduced  members;  and  by  the  people  and  governors  of  the 
land,  who  may  find  in  such  a  situation  a  spark  to  initiate  a  great 
conflagration.  .  .  . 

.  .  .  There  are,  however,  two  sides  to  this  question.  There  are 
numerous  cases,  susceptible  of  proof  to  the  man  on  the  spot  but  of 
which  it  would  be  diflScult  to  carry  conviction  to  the  minds  of  those 
at  a  distance,  where  the  missionary  undoubtedly  intervenes  to  make 
capital  for  his  mission  and  to  secure  for  his  followers  some  tangible 
advantage  from  their  acceptance  of  his  propaganda.  At  the  other 
extremity  there  is  the  manifest  tendency,  clearly  recognized  by  all, 
even  the  most  impartial,  but  quite  incapable  of  legal  demonstration, 
for  the  judges  of  the  land  in  cases  where  the  right  is  not  obviously 
on  one  side  or  the  other,  to  decide  ex  motu  sua  against  the  convert ; 
ostensibly  such  decisions  are  given  on  as  good  legal  grounds  as  any 
case  in  China  is  ever  decided,  but  practically  the  underlying  reason 
is  the  convert's  religion — ^not  the  judge's  antipathy  to  the  religion 
itself,  but  his  ingrained  feeling  that  the  convert  has  become  less 
Chinese  than  the  non-convert.^^ 

Secular  Work  by  Missionaries.  At  times  the  question 
has  been  raised  as  to  the  right  of  missionaries  to  engage 

'^  Trade  and  Administration  of  China,  p.  198.  In  an  Appendix  (c) 
Morse  gives  the  text  of  a  circular  which  the  British  Minister  at  Peking 
found  it  necessary  to  issue  in  1903  calling  missionaries'  attention  to  the 
fact  that  it  was  improper  for  them  to  address  Chinese  officials,  either 
verbally  or  in  writing,  in  behalf  of  their  converts,  and  that,  if  represen- 
tations were  needed,  the  matter  should  be  brought  before  the  nearest 
consul  through  whom,  if  deemed  proper,  representations  might  be  made 
to  the  Chinese  authorities.  "The  fact  that  a  missionary  or  the  convert 
on  whose  behalf  a  complaint  is  made  resides  at  a  distance  from  one  of 
H.  M.  Consuls  is  not  sufficient  reason  for  the  missionary  taking  upon  him- 
self the  duty  of  the  consul,  and  his  intervention  could  only  be  justified 
when  there  was  imminent  danger  of  an  extreme  character  threatening  the 
safety  of  converts." 


206      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

in  secular  occupations  incidentally  connected  with  their 
religious  work.  As  to  the  rights  here  involved  we  may 
quote  from  the  letter  of  American  Minister  Denby  of 
February  3,  1897.  Writing  to  the  Secretary  of  State, 
he  said: 

Under  the  Berthemy  convention  the  right  to  reside  in  the  interior 
and  to  buy  land  for  residential  purposes  was  secured  to  missionaries. 
In  no  convention  or  treaty  is  anything  said  about  the  right  to  carry 
on  by  foreigners  residing  there  any  regular  employment  in  the 
interior.  In  practice,  however,  it  is  a  common  thing  for  mission- 
aries all  over  China  to  engage  in  many  species  of  employments 
which  are  considered  as  aids  or  adjuncts  to  their  religious  and 
charitable  work.  They  have  printing  establishments,  book-binderies, 
industrial  schools,  workshops,  stores,  dispensaries.  They  are  doc- 
tors, colporteurs,  newspaper  correspondents;  one  of  them  living 
here  lodges  and  boards  strangers.  All  kinds  of  furniture  is  manu- 
factured here  and  pubhcly  sold  by  missionaries.  Washing  and 
sewing  are  done  by  the  CathoUc  missionaries.  In  fact,  there  is 
complete  tolerance  of  all  kinds  of  work.  It  is  understood,  of  course, 
that  the  profits  of  these  various  enterprises  go  to  the  general  fund 
of  the  mission,  and  are  used  to  promote  religious  purposes.  In 
answering  Mr.  Simpson  (who  had  made  inquiry)  I  have  not  been 
able  to  draw  the  Hne  between  pursuits  thus  permitted  and  agricul- 
ture, stock  raising,  or  trading.  Of  course,  much  would  depend  on 
the  manner  that  such  pursuits  were  carried  on.  The  question  of 
the  right  to  engage  in  trade  or  commerce  seems  to  depend  entirely 
on  tolerance.  If  the  particular  enterprise  engaged  in  in  any 
locality  is  not  prohibited  by  the  officials  and  is  allowed  to  be  prose- 
cuted without  objection,  it  would  finally  be  sanctioned  by  usage, 
and  might  be  entitled  to  protection  of  the  Treaty  Powers.^' 

In  1911  the  Chinese  foreign  office,  in  consultation  with 
the  Legations  at  Peking,  promulgated  a  new  set  of  rules 

"?7.  8.  For.  Rels.,  1897,  p.  105. 


LANDHOLDING  BY  FOREIGNEKS  207 

governing  the  holding  of  property  by  foreigners  in  the 
interior,  which  rules  Dr.  Koo  summarizes  as  follows: 

**  (1)  That  property  owners  shall  be  free  to  sell  their 
property  and  the  missions  desiring  to  buy  shall  not  co- 
erce them  to  sell;  (2)  that  the  missions  shall,  before 
purchasing  any  property  consult  the  local  officials  and 
request  them  to  make  an  official  survey  of  the  ground 
and  ascertain  the  records;  (3)  that  after  the  purchase 
is  made,  they  shall  apply  to  the  authorities  for  a  tax- 
deed;  (4)  that  the  property  purchased  shall  always 
remain  the  property  of  the  mission,  and  a  tablet  shall  be 
erected  to  record  its  ownership;  (5)  that  if  the  mission, 
after  purchasing  a  property  should  sell  it  to  Chinese, 
they  are  prohibited  clandestinely  to  sell  it  to  foreigners ; 
(6)  that  the  local  authorities  shall  forbid  the  purchase  of 
property  in  all  cases  where  the  property  is  purchased  in 
the  name  of  a  mission,  but  not  to  be  used  for  the  purposes 
of  the  mission,  or  where  it  is  to  be  used  for  foreign 
merchants  for  trading  purposes.'*^* 


^Status  of  Aliens  in  China,  p.  333.    Dr.  Koo,  for  the  text  of  the  rules 
themselves,  refers  to  the  Shanghai  Eastern  Times,  of  April  19,  1911. 


CHAPTEE  Vn 

Concessions  and  Settlements 


It  has  already  appeared  that  the  rights  of  foreigners 
to  carry  on  trade  and  other  pursnits,  to  hold  land,  etc., 
may  be  exercised,  except  by  missionaries,  only  in  the 
Open  Ports.^  It  has  also  been  seen  that  within  a  number 
of  these  ports  it  has  been  provided  by  treaty  that  certain 
areas  should  be  delimited  for  these  purposes.  These 
areas  have  come  to  be  known  as  **  Concessions  "  or 
"  Settlements." 

Foreign  Residential  Areas,  Settlements,  and  Conces- 
sions Defined.  These  terms,  though  often  used  as  syn- 
onymous need  to  be  distinguished.  Accurately  stated, 
the  generic  term  or  phrase  is  **  Areas  Set  Apart  for 
Foreign  Eesidence,"  or  **  Foreign  Residential  Areas  "; 
which  areas  include,  as  distinct  types,  "  Concessions  " 
and  **  Settlements."  But  these  specific  terms  are  each 
of  them  very  coromonly  used  in  a  generic  sense  as  includ- 
ing all  the  types  of  urban  areas  set  apart  by  the  Chinese 
authorities  for  residence  by  foreigners.  As  will  later 
appear,  the  International  Settlement  at  Shanghai  is  usu- 
ally taken  as  typical  of  the  foreign  residential  areas 
properly  denominated  Settlements.    There  the  area  is 

*The  situation  in  Manchuria  under  the  Sino-Japanese  Treaty  of  1915 
has  already  been  noted.  The  term  "  Open  Ports,"  rather  than  "  Treaty 
Ports  "  is  here  employed  since  a  number  of  the  ports  have  been  opened 
by  China  to  foreign  trade  not  as  a  result  of  treaty  obligation,  but  suo 
motu. 

208 


CONCESSIONS  AND  SETTLEMENTS  209 

delimited  by  boundary  lines,  but  the  land  within  these 
limits  remains  npon  the  registers  of  the  Chinese  land 
office,  and  the  Chinese  are  not  disturbed  in  the  posses- 
sion and  occupation  of  any  property  that  they  may  have 
in  the  area.  Foreigners  are  not  permitted  to  acquire  fee 
simple  titles  to  lands  within  the  Settlement,  but  may 
obtain  perpetual  leases. 

The  foreign  residential  areas  at  Hankow  are  typical 
of  the  areas  properly  termed  "  Concessions."  ^  There 
the  entire  areas  are  severally  leased  to  the  foreign 
Powers  concerned  and  an  annual  land  tax  is  paid  by  those 
Powers  to  the  Chinese  Government.  Previously  to  these 
leases  the  lands  within  the  concessions  are  obtained  from 
their  private  owners  by  expropriation  or  voluntary  sales. 
Foreigners  obtain  titles  to  particular  pieces  of  land  from 
the  foreign  Power  concerned  through  its  consular  author- 
ity. The  deed  is  issued  by  the  consular  official  of  that 
Power  and  is  usually  taken  by  the  foreigner  to  the  con- 
sulate of  his  own  nationality  for  registration.  This  regis- 
tration, however,  as  in  the  case  of  the  International 
Settlement  at  Shanghai,  is  simply  a  matter  of  record  in 
case  the  deed  is  lost  or  there  is  a  dispute  as  to  its  exist- 
ence or  terms. 

In  ports  in  which  foreign  residential  areas  have  been 
voluntarily  opened  by  the  Chinese,  foreigners  are  per- 
mitted to  obtain  leases  for  a  period  not  longer  than  thirty 
years  of  lands  for  residential  and  business  purposes.  The 
Government  of  China  has  taken  the  ground,  though  not 
without  some  demur  upon  the  part  of  the  Treaty  Powers, 

*  The  term  "  Concession  "  is  also  used  in  a  wholly  different  sense  as  the 
name  of  a  grant  made  by  the  Chinese  Government  to  particular  parties 
for  the  construction  of  a  railway  and  other  public  work. 

14 


210      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

that  in  ports  opened  to  foreign  trade  by  Chinese  Govern- 
ment decree  rather  than  by  treaty,  the  whole  area  of  the 
city  should  be  deemed  opened  to  foreign  business  and 
residence. 

Land  Transfers  and  Ownership  in  Concessions  and  Set- 
tlements. In  Shanghai,  a  foreigner  desiring  to  purchase 
land  obtains  from  the  original  Chinese  owner  the  old 
Chinese  title  deeds  and  tax  receipts.  These  he  takes  to 
his  Consulate  and  through  that  office  makes  application 
to  the  Chinese  authorities  for  a  new  title  deed  in  his  own 
name.  When  the  new  deed  has  been  issued,  bearing  the 
stamp  of  the  Chinese  official  in  charge  of  the  land  regis- 
ters, the  old  deeds  are  cancelled.  Three  copies  of  the 
new  deed  are  issued,  all  duly  stamped,  one  remaining  in 
the  records  of  the  Chinese  land  office,  one  in  the  records 
of  the  Consulate,  and  the  third  retained  by  the  new  owner 
of  the  land.  In  this  procedure  the  important  element  is 
that  aU  of  the  records  are  Chinese  records,  and  that  evi- 
dence of  the  title  reposes  in  the  seal  of  the  Chinese  magis- 
trate or  land  officer.  The  foreign  consular  record  means 
nothing  except  in  case  the  foreign  owner  loses  his  deed. 

In  the  Concessions  Chinese  are  not  supposed  to  hold 
lands.  In  fact,  however,  they  do  so  by  borrowing  (usu- 
ally for  a  financial  consideration)  the  names  of  for- 
eigners. This  practice  also  exists  in  the  International 
Settlement  at  Shanghai.^  There,  however,  a  great  deal 
of  land  is  held  directly  by  the  Chinese,  the  original  titles 
never  having  been  transferred  to  foreign  ownership. 

•Certain  foreign  lawyers  and  other  individuals  in  Shanghai  conduct  a 
profitable  business  by  charging  Chinese  a  fee  of  twenty-five  dollars  for 
registering  their  lands  in  foreigners'  names. 


CONCESSIONS  AND  SETTLEMENTS  211 

The  reasons  leading  Chinese  to  desire  to  get  the  titles 
to  their  lands  in  the  names  of  foreigners,  while  reserving 
to  themselves  the  beneficial  interests  therein,  have  been 
the  following.  (1)  In  case  of  family  litigation  or  clan 
levies  the  Chinese  can  make  it  appear  that  the  lands  are 
in  foreign  hands  and  therefore  exempt  from  assessment. 
(2)  By  obtaining  registration  under  a  foreign  name  an 
accurate  survey  and  delimitation  of  boundaries  of  the 
lands  concerned  is  secured.  This  has  become  a  very 
important  matter  in  Shanghai  where  land  has  become 
quite  valuable  and  is  sometimes  sold  by  the  foot.  The 
old  Chinese  evidences  of  title  exhibit  no  exact  boundary 
lines,  and  even  as  muniments  of  title  are  by  no  means 
satisfactory.  During  the  Taiping  rebellion  all  of  the 
magistrates'  records  were  destroyed  and  were  replaced 
by  certificates  issued  by  the  new  authorities  which,  on 
their  face,  simply  indicated  that  the  holder  held  title  to 
so  many  mou  of  land.  Many  of  these  certificates  were 
counterfeited  so  that  a  landholder  could  not  be  sure  that 
the  certificate  which  he  held  was  genuine.  The  surveys 
following  foreign  registration  settle  once  for  all  both 
boundaries  and  titles. 

China's  Sovereignty  not  Surrendered.  In  no  cases  are 
these  concessions  or  settlements  taken  from  the  sover- 
eignty of  China.  The  foreigners  living  within  them  are 
entitled  to  only  those  extraterritorial  rights  and  privi- 
leges to  which  they  are  entitled  anywhere  else  in  China, 
and  the  Chinese  living  within  these  areas  are  likewise  in 
no  way  removed  from  the  jurisdiction  of  the  native 
courts  or  other  Chinese  governmental  organs.*     Thus, 

*  As  an  exception  to  this  statement  see  o/nte,  p,  55  as  to  the  status 


212      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

witMn  the  settlements  or  concessions  we  find  functioning 
practically  the  same  judicial  tribunals  that  function  out- 
side of  them,  the  foreign  consuls  taking  jurisdiction  in 
cases  in  which  their  nationals  are  defendants,  and  the 
Chinese  native  courts  taking  charge  when  Chinese  are 
defendants.  So  also  foreigners  holding  real  estate  in 
those  areas  pay  the  ordinary  land  tax  to  the  Chinese 
Government. 

In  corroboration  of  the  statement  that  settlements  and 
concessions  remain  under  Chinese  political  sovereignty, 
we  may  quote  Article  I  of  the  Sino- American  Treaty  of 
1858,  which  reads  as  follows : 

His  Majesty  the  Emperor  of  China  being  of  opinion  that  in 
making  concessions  to  the  citizens  or  subjects  of  foreign  powers  of 
the  privilege  of  residing  on  certain  tracts  of  land  or  resorting  to 
certain  waters  of  that  empire  for  purposes  of  trade,  he  has  by  no 
means  rehnquished  his  right  of  eminent  domain  or  dominion  over 
the  said  lands  and  waters  hereby  agrees  ...  It  is  further  agreed 
that  if  any  right  or  interest  in  any  tract  of  land  in  China  has  been 
or  shall  hereafter  be  granted  by  the  Government  of  China  to  the 
United  States  or  their  citizens  for  purposes  of  trade  or  commerce, 
that  grant  shall  in  no  event  be  construed  to  divest  the  Chinese 
authorities  of  their  right  of  jurisdiction  over  persons  and  property 
within  said  tract  of  land,  except  so  far  as  that  right  may  have  been 
expressly  rehnquished  by  treaty. 

As  a  typical  treaty  provision  defining  the  rights  of 
foreigners  in  the  Treaty  Ports  we  may  quote  the  follow- 
ing from  Article  III  of  the  Sino- American  agreement  of 
1903. 

Citizens  of  the  United  States  may  frequent,  reside,  carry  on 
trade,  industries  and  manufactures,  or  pursue  any  lawful  avocation, 

of  Chinese  within  the  settlements  at  Shanghai.  This,  however,  is  an 
exception  of  practice  rather  than  of  strict  treaty  or  legal  right. 


CONCESSIONS  AND  SETTLEMENTS  213 

in  all  the  ports  or  localities  of  China  which  are  now  open  or  may 
hereafter  be  opened  to  foreign  residence  and  trade ;  and,  within  the 
suitable  localities  at  those  places  which  have  been  or  may  be  set 
apart  for  the  use  and  occupation  of  foreigners,  they  may  rent  or 
purchase  houses,  places  of  business,  and  other  buildings,  and  rent 
or  lease  in  perpetuity  land  and  build  thereon. 

It  is  not  to  be  understood  that  foreigners  are  permitted 
to  reside  only  within  the  limits  of  the  concessions  or  set- 
tlements as  fixed  by  treaties  or  other  understandings 
with  the  Chinese  Government;  upon  the  contrary,  the 
entire  areas  of  the  Treaty  Ports  are  open  to  them  for 
residence,  and  this  right  is  very  largely  made  use  of. 
Reciprocally,  many  Chinese  are  found  residing  within 
the  concessions.  As  to  their  right  thus  to  do,  we  find  the 
American  Secretary  of  State  writing,  on  November  30, 
1908,  to  the  American  Minister  at  PeMng,  as  follows : 

Since  this  government  has  asserted  that  American  citizens  are 
entitled  to  reside  and  hold  land,  not  only  within  the  settlements 
which  have  been  dehmited  at  certain  open  cities  in  China,  but 
within  these  cities  themselves,  the  Department  considers  that  the 
exclusion  of  Chinese  from  these  international  settlements  at  treaty 
ports  would  be  unwarranted,  and  would  go  far  to  justify  the  Chinese 
in  their  contention,  which  we  have  never  accepted,  that  Americans 
and  other  foreigners  are  not  entitled  under  the  treaties  to  reside 
within  the  so-called  native  cities,  but  should  be  confined  within  the 
hmits  of  their  concessions." 

Governing  Powers  in  Concessions.  The  significance  of 
a  concession  or  settlement  at  a  Treaty  Port,  then,  comes 
down  to  this:  that  permission  is  given  by  the  Chinese 
Government  to  the  foreigners  concerned,  to  set  up  and 
maintain  local  governmental,  or,  more  exactly,  local  ad- 

'  U.  8.  For.  Rels.,  1908,  p.  123. 


214      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

ministrative  agencies  for  police  purposes,  sanitation, 
making  of  roads,  building  regulations,  etc.  The  admin- 
istrative organs,  created  for  carrying  out  these  public 
purposes,  levy  taxes,  the  proceeds  of  which,  must,  how- 
ever, be  devoted  exclusively  to  the  performance  of  these 
local  administrative  tasks.  They  may  not  be  levied  for 
any  other  purpose. 

In  these  respects  the  governing  bodies  in  the  settlements 
and  concessions  very  much  resemble  the  city  governments 
of  America.  They  are,  however,  distinguished  from 
them  in  the  important  respect  that,  as  has  been  already 
suggested,  they  are  administrative  rather  than  political 
bodies.  They  have  no  standing  as  agencies,  for  local 
purposes,  of  the  sovereign  state  from  which,  by  municipal 
charter,  they  derive  legal  powers,  to  take  action  and  to 
issue  rules  that  have  the  force  of  law. 

While  they  have  authority  to  maintain  police  forces,  the 
members  of  which  may  make  arrests,  they  have  no  power 
to  establish  courts  for  the  enforcement  of  the  adminstra- 
tive  rules  which  they  issue — all  judicial  proceedings  must 
be  before  the  consular  courts.® 

Legal  Basis  of  Administrative  Ordinances.     There  is, 

indeed,  great  difficulty  in  finding  a  satisfactory  logical 
basis  for  ascribing  any  legally  controlling  force  to  the 
rules  and  regulations  issued  by  the  governing  authorities 
of  the  concessions  and  settlements,  for  they  are  not  is- 
sued in  pursuance  of  a  delegated  legislative  authority 
derived  from  a  sovereign  legislative  source.  This  diffi- 
culty was  recognized  by  the  Ajnerican  Secretary  of  State, 

•Or,  in  the  case  of  Englishmen,  before  the  Supreme  Court  of  CMna,  or 
of  Americans  before  the  United  States  Court  for  China. 


CONCESSIONS  AND  SETTLEMENTS  215 

who,  writing  to  the  American  Minister  at  Peking,  March 
7,  1887,  said: 

The  question  which  you  suggest  as  to  the  authority  of  the  consul- 
general  at  Shanghai  to  enforce  the  ordinances  of  the  municipality 
against  citizens  of  the  United  States  is  not  without  difficulty. 
Under  section  4086  of  the  Eevised  Statutes  of  the  United  States, 
consuls  of  the  United  States  in  China  are  empowered  to  exercise 
criminal  and  civil  jurisdiction  in  conformity  with  the  laws  of  the 
United  States.  It  is  provided,  however,  that  when  those  laws  are 
not  adapted  to  the  object,  or  are  deficient  in  the  provisions  neces- 
sary to  furnish  suitable  remedies,  the  common  law  and  the  law  of 
equity  and  admiralty  shall  be  extended  to  the  persons  within  the 
consul's  jurisdiction ;  and  if  neither  the  common  law  [nor  the  law] 
of  equity  or  admiralty,  nor  the  Statutes  of  the  United  States,  fur- 
nish appropriate  remedies  the  ministers  in  the  countries,  respec- 
tively, to  which  the  statute  applies  shall,  by  decrees  and  regulations 
which  shall  have  the  force  of  law,  supply  such  defects  and  defi- 
ciencies. 

The  last  clause,  in  respect  to  decrees  and  regulations,  has  been 
construed  by  the  Department  to  confer  upon  the  ministers  in  ques- 
tion the  power  to  regulate  the  course  of  procedure  and  the  forms  of 
judicial  remedies  rather  than  any  general  legislative  power  for  the 
definition  of  offences  and  the  imposition  of  penalties  for  their  com- 
mission. It  is  true  that  opinion  has  been  divided  on  this  point. 
Mr.  Attorney-General  Cushing  held  that  the  power  given  to  the 
commissioner  of  the  United  States  in  China  to  make  "  decrees  and 
regulations  "  which  should  have  the  force  of  law  gave  him  the  power 
to  legislate  in  certain  respects  for  citizens  of  the  United  States  in 
China,  and  "  to  provide  for  many  cases  of  criminality  which  neither 
Federal  statutes  nor  the  common  law  could  cover."  (7  Op.  505.) 
The  disposition,  however,  of  this  department  has  been  to  restrict 
the  legislative  power  of  the  minister  to  the  regulation  of  the  forms 
and  course  of  judicial  procedure,  it  not  being  regarded  as  desirable 
or  proper  to  authorize  the  exercise  of  so  great  a  power,  while  it  was 
so  much  in  doubt,  as  that  of  criminal  legislation. 

But  the  ordinances  of  the  municipality  of  Shanghai,  although 


216      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

dependent  for  their  operation  as  to  citizens  of  the  United  States 
upon  the  approval  of  the  minister  of  this  Government  in  China,  are 
conceived  to  present  in  one  aspect  a  different  question  from  that  of 
the  power  of  the  minister  of  the  United  States  as  to  criminal  legis- 
lation. The  municipality  of  Shanghai  is  understood  to  have  been 
organized  by  the  voluntary  action  of  the  foreign  residents  [of  cer- 
tain nationalities],  or  such  of  [those  residents]  as  were  owners  or 
renters  of  land,  for  the  purpose  of  exercising  such  local  powers  for 
the  preservation  of  the  order  and  morals  of  the  community  as  are 
usually  enjoyed  by  municipal  bodies.  In  the  United  States,  where 
government  is  reduced  to  a  legal  system,  these  powers  of  local 
police  rest  on  charters  granted  by  the  supreme  legislative  authority 
of  the  State ;  but  it  is  not  difficult  to  conceive  of  a  case  in  which  a 
community  outside  of  any  general  system  of  law  might  organize 
a  government  and  adopt  rules  and  regulations  which  would  be  rec- 
ognized as  valid  on  the  ground  of  the  right  of  self-preservation, 
which  is  inherent  in  people  everywhere. 

In  this  light  may  be  regarded  the  municipal  ordinances  of  Shang- 
hai. The  foreign  settlement  not  being  subject  to  the  laws  of  China, 
and  the  legal  systems  of  the  respective  foreign  powers  represented 
there  being  not  only  dissimilar  inter  se,  but  insufficient  to  meet  the 
local  needs,  it  became  necessary  for  the  local  residents  interested 
in  the  preservation  of  peace  and  order  to  supply  the  deficiency. 

American  citizens  residing  in  Shanghai  enjoy,  in  common  vrith 
other  persons  composing  the  foreign  settlement,  all  the  rights,  privi- 
leges, and  the  protection  which  the  municipal  government  affords; 
and  as  they  go  there  voluntarily,  and  presumptively  for  the  advance- 
ment of  their  personal  interests,  they  may  reasonably  be  held  to 
observe  such  police  regulations  as  are  not  inconsistent  with  their 
rights  under  the  laws  of  the  United  States.  It  is  true  that  this 
reasoning  is  not  conclusive  as  to  the  strict  legal  authority  of  the 
consul-general  of  the  United  States  to  enforce  such  regulations; 
but,  taken  in  connection  with  the  fact  that  at  present  American 
citizens  in  Shanghai  are  not  subject  to  any  judicial  control  except 
that  of  the  consul-general  of  the  United  States,  it  affords  a  basis 
upon  which  his  enforcement  of  the  municipal  regulations  may  be 
justified. 

It  is  important  to  observe  that  the  jurisdiction  of  consuls  of  the 


CONCESSIONS  AND  SETTLEMENTS  217 

United  States  in  China  is  very  extensive,  including  not  only  the 
administration  of  the  laws  of  the  IJnited  States,  and  the  law  of 
equity  and  admiralty,  hut  also  of  the  common  law.  The  consular 
courts  have,  therefore,  what  the  courts  of  the  United  States  gen- 
erally have  not — common  law  Jurifidiction  in  criminal  cases.  It  is 
true  that  this  jurisdiction  is  difficult,  indeed  incapable,  of  exact 
definition,  but  it  implies  the  power  to  enforce  rules  which  are  not 
to  be  found  on  the  statute  book  of  the  United  States,  and  which  can 
be  ascertained  only  by  the  application  of  the  general  principles  of 
the  common  law  to  special  cases  and  conditions.  In  respect  to 
matters  of  local  police,  a  fair  measure  and  definition  of  the  law  may 
be  found  in  the  regulations  adopted  by  the  municipality  in  aid  of 
and  supplementary  to  the  general  juridical  systems  of  the  foreign 
powers.  Such  a  process,  while  maintaining  the  peace  and  order  of 
the  community,  tends  to  consolidate  the  local  administration  of 
law.*' 

Classes  of  Concessions  and  Settlements.  Having  con- 
sidered certain  chai;acteristics  common  to  all  the  conces- 
sions and  settlements  in  China,  we  are  now  in  a  position 
to  mention  the  respects  in  which  these  foreign  municipal 
areas  at  the  different  treaty  ports  differ  from  one  an- 
other. Classified  by  these  differences  they  fall,  accord- 
ing to  Morse,  into  four  classes,  two  of  these  classes,  how- 
ever, being  represented  each  by  but  a  single  example. 

1.  In  the  first  class  we  may  place  the  concessions  at 
Tientsin,  Hankow,  KiuHang,  Newchwang,  Canton,  and 
other  ports,  covering  areas  leased  in  perpetuity  to  par- 
ticular Powers  by  the  Chinese  Government,  these  areas 
being  divided  into  lots  the  sub-leases  to  which  are  sold 
and  from  the  proceeds  roads  built,  river  banks 
"  bunded  "  and  other  public  improvements  made.  In 
these  concessions  the  consul  of  the  nation  holding  the 
concessional  lease  is  the  chief  official.  In  the  British 
concessions  he  is  aided  by  a  municipal  council  elected  or 

*•  Quoted  in  Moore's  Digest  of  International  Law,  n,  648. 


218      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

nominated  by  the  foreign  taxpayers  or  holders  of  the 
sub-leases. 

2.  The  **  International  "  and  French  settlements  at 
Shanghai  are  in  a  class  by  themselves.  They  include 
areas  set  apart  for  foreign  residence  and  trade  by  the 
Chinese  Government  but  not  leased  to  the  foreign  pow- 
ers concerned.  Deeds  to  interests  in  lands  within  these 
areas  are  therefore  issued  by  and  registered  with  Chinese 
territorial  authorities.'^ 

3.  As  an  illustration  of  the  third  class  of  concessions, 
those  at  the  port  of  Chefoo  may  be  described.  "  Here," 
says  Morse,  *  *  there  is  neither  concession  nor  settlement, 
in  the  sense  of  an  administrative  municipality,  but  since 
the  opening  of  the  port  the  entire  promontory  of  Yentai, 
which  projects  into  the  harbor,  has  been  more  or  less 
tacitly,  and  without  any  formal  agreement,  reserved  for 
occupation  as  a  foreign  quarter.  The  residents  have 
bought  their  own  land,  have  made  their  own  winding 
roads,  and  have  maintained  cleanliness  and  order  mainly 
through  the  force  of  public  opinion.  They  have  assessed 
themselves  and  have  expended  their  assessments  through 
a  headless  committee,  but  have  no  official  status  as  a  seLf- 
goveming  administrative  body. ' '  ^ 

4.  The  fourth  class  of  concessions  may  also  be  de- 
scribed by  giving  an  example — that  of  Yochow.  Again 
we  will  quote  from  Morse.  '*  The  municipal  plan  adopted 
at  Yochow  is  one  which  has  been  introduced  at  some 
other  ports.  The  Chinese  government  expropriated  the 
land  required  for  an  '  international  settlement, '  laid  out 

*  See  at  the  end  of  this  chapter  a  special  note  descriptive  of  the  settle- 
ments at  Shanghai. 

•  Trade  and  Adrnmistration  of  China,  p.  221. 


CONCESSIONS  AND  SETTLEMENTS  219 

roads  and  sold  the  lots  by  auction,  reserving  an  annual 
ground  rent  of  a  substantial  amount;  wharfage  dues, 
moderate  in  amount,  are  levied;  municipal  work  and 
police  are  under  the  joint  control  of  the  Yochow  terri- 
torial Taotai  and  the  Commissioner  of  Customs ;  all  ex- 
penses are  at  the  charge  of  the  Chinese  government,  and 
the  community  is  burdened  neither  with  further  taxation 
nor  with  the  task  of  governing;  in  the  event  of  further 
taxation  becoming  necessary,  it  will  be  under  the  control 
of  a  representative  body.  The  population  of  Yochow  is 
20,000,  and  the  *  treaty  port '  is  five  miles  distant,  at  a 
point  where  alone  a  safe  anchorage  could  be  found. ' '  ^ 

Legation  Quarter  at  Peking.  As  a  result  of  the  Boxer 
outbreak  in  1900  the  Treaty  Powers  found  it  necessary, 
for  the  protection  of  their  legations  at  Peking,  to  obtain 
certain  rights  in  addition  to  those  ordinarily  enjoyed  by 
diplomatic  representatives  in  foreign  lands. 

In  a  Protocol  annexed  to  a  note  of  January  16,  1901, 
China  recognized  the  right  of  each  Power  to  maintain  a 
permanent  guard  for  the  protection  of  its  Legation  in 
the  area  or  "  Quarter  "  in  Peking  set  apart  for  the  use 
of  the  Legations.  In  the  Final  Protocol  of  September  7, 
1901,  the  limits  of  this  Quarter  were  defined,  and  by  Ar- 
ticle VII  it  was  declared  that : 

The  Chinese  Government  has  agreed  that  the  Quarter  occupied 
by  the  Legations  shall  be  considered  as  one  specially  reserved  for 
their  use  and  placed  under  their  exclusive  control,  in  which  Chinese 
shall  not  have  the  right  to  reside  and  which  may  be  made  de- 
fensible.^" 

*  Trade  and  Administration  of  China,  p.  231. 

"  For  the  delimitation  of  the  Legation  Quarter,  see  Annex  No.  14  to  the 
Final  Boxer  Protocol  of  1901.    See  MacMurray,  No.  1901/3,  in  which  a 


220      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

By  a  Protocol,  under  date  of  June  13,  1904,  drawn  up 
by  the  Diplomatic  Body  at  Peking,  a  series  of  regulations 
rogardi^g  the  use  and  occupation  of  land  and  roads 
within  the  Legation  Quarter  and  of  the  glacis  surround- 
ing it  was  drawn  up  and  the  declaration  made  that  the 
Representatives  of  the  Powers  would  proceed  to  draw 
up  a  plan  of  general  government  for  the  police  and  con- 
trol of  the  roads  of  the  area  and  submit  it  for  approval 
to  their  respective  Governments.  And,  furthermore,  that 
they  would  take  steps  to  obtain  the  necessary  authority 
to  enforce  these  regulations  upon  their  nationals,  and  to 
oblige  them  to  pay  the  taxes  intended  to  insure  the  ser- 
vice of  the  police  and  the  maintenance  of  the  roads. ^^ 

note  to  Article  VII  gives  a  translation,  of  the  Protocol  of  the  Diplomatic 
Body  regarding  the  L^ation  Quarter. 

"Article  X  of  the  Sino-Japanese  treaty  of  1903  provides  as  follows: 

"The  High  Contracting  Parties  agree  that,  in  case  of  and  after  the 
complete  withdrawal  of  the  foreign  troops  stationed  in  the  province  of 
Chihli  and  of  the  Legation  guards,  a  place  of  international  residence  and 
trade  in  Peking  will  be  forthwith  opened  by  China  itself.  The  detailed 
regulations  relating  thereto  shall  be  settled  in  due  time  after  consultation." 

In  pursuance  of  this  engagement  an  understanding  was  arrived  at  which 
was  embodied  in  Annex  6  of  the  treaty  of  1903. 

In  this  Annex,  the  Chinese  agreed  that  after  the  withdrawal  of  the 
troops  as  provided  for  in  the  treaty  itself,  "  a  place  in  Peking  outside  the 
Inner  City,  convenient  to  both  parties  and  free  from  objections,  shall  be 
selected  and  set  apart  as  a  place  where  merchants  of  all  nationalities  may 
reside  and  carry  on  trade.  Within  the  limits  of  this  place  merchants  of 
all  nationalities  shall  be  at  liberty  to  lease  land,  build  houses  and  ware- 
houses, and  establish  places  of  business;  but  as  to  the  leasing  of  houses 
and  land  belonging  to  Chinese  private  individuals,  there  must  be  willing- 
ness on  the  part  of  the  owners,  and  arranged  without  any  force  or  com- 
pulsion. All  roads  and  bridges  in  this  place  must  be  under  the  jurisdiction 
and  control  of  China.  Foreigners  residing  in  this  place  are  to  observe 
the  municipal  and  police  regulations  on  the  same  footing  as  Chinese  resi- 
dents and  they  are  not  to  be  entitled  to  establish  a  municipality  and  police 
of  their  own  within  its  limits  except  with  the  consent  of  the  Chinese 
authorities.  When  such  place  of  international  residence  and  trade  shall 
liave  been  opened  and  its  limits  properly  defined,  the  foreigners  who  have 


CONCESSIONS  AND  SETTLEMENTS  331 

Administration  of  the  Legation  Quarter.  Avery  informal 
method  of  regulating  the  affairs  of  the  Legation  Quarter 
has  been  arranged  by  the  various  Diplomatic  Represen- 
tatives. There  is  appointed  by  them  a  Commission  which 
levies  taxes  for  the  maintenance  of  roads  and  bridges 
and  the  employment  of  a  corps  of  policemen,  who,  though 
Chinese,  are  employed  and  paid  by  the  Legations,  wear  a 
special  uniform,  and  are  not  under  the  control  of  the 
Peking  authorities.  The  Commission  has  little  power  of 
its  own;  that  is,  it  takes  administrative  action  in  each 
case  only  within  the  scope  of  the  specific  authorization 
given  it  by  a  unanimous  vote  of  the  Diplomatic  Body 
or  council  of  the  heads  of  the  several  foreign  Legations. 

Foreign  Garrisons  in  China.  Lq  addition  to  being  per- 
mitted to  maintain  Legation  guards  at  Peking,  the 
Treaty  Powers  by  Article  IX  of  the  Final  Boxer  Pro- 
tocol of  1901,  secured  from  China  the  right  to  maintain 

been  residing  scattered  both  within  and  without  the  city  walls  shall  all 
be  required  to  remove  their  residence  thereto,  and  they  shall  not  be 
allowed  to  remain  in  separate  places  and  thereby  cause  inconvenience  in 
the  necessary  supervision  by  the  Chinese  authorities.  The  value  of  the 
land  and  buildings  held  by  such  foreigners  shall  be  agreed  upon  equitably 
and  due  compensation  therefore  shall  be  paid.  The  period  for  such 
removal  shall  be  determined  in  due  time  and  those  who  do  not  remove 
before  the  expiry  of  this  period  shall  not  be  entitled  to  compensation." 

The  foregoing  undertaking,  it  will  be  observed,  was  made  by  the  Chinese 
Government  to  the  Imperial  Japanese  Commissioners,  and  a  point  might 
therefore  be  raised  as  to  the  extent  to  which  the  Chinese  are  boimd  by  its 
provisions  to  the  other  treaty  powers.  Insofar  as  the  imdertaking  creates 
rights  or  privileges  the  nationals  of  the  other  Powers  would  be  entitled  to 
them  under  the  operation  of  the  most  favored  nation  principle.  But 
insofar  as  there  is  a  declaration  that  all  foreigners  must  move  into  this 
settlement  after  it  is  created,  the  right  to  require  this  would  be  an 
exercise  of  China's  sovereignty. 

As  yet  there  has  been  no  withdrawal  of  foreign  legation  troops  and 
legation  guards,  so  that  no  obligation  upon  the  part  of  China  to  establish 
this  foreign  area  in  Peking  has  accrued. 


232      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

garrisons  at  certain  points  between  Peking  and  the  sea, 
of  which  Tientsin  should  be  one,  the  intention  being  thus 
to  avoid  the  danger  in  the  future  of  having  communica- 
tions between  the  capital  and  the  sea  cut  by  forces  hos- 
tile to  the  Powers.  The  forts  at  Taku  and  other  forts 
that  might  interfere  with  free  communication  between 
Peking  and  the  sea  were  also  to  be  demolished. 

By  identic  notes  of  July  15,  1902,i2  the  five  Powers 
maintaining  at  that  time  a  Provisional  Government  over 
Tientsin — ^that  is,  France,  Germany,  Great  Britain,  Italy, 
and  Japan — proposed  that  the  Chinese  Government 
should  undertake  not  to  station  or  march  troops  within 
twenty  Chinese  li  (i.  e.,  between  6  and  7  miles)  of  the  city 
or  of  the  troops  stationed  at  Tientsin,  and,  furthermore, 
that  the  jurisdiction  of  the  commanders  of  the  foreign 
troop  should  continue  to  extend  to  a  distance  of  two  miles 
on  either  side  of  the  railway ;  but  that  the  Viceroy  should 
have  the  right  to  maintain  a  personal  bodyguard  in  the 
city  of  Tientsin,  not  exceeding  three  hundred  men,  and 
also  to  maintain  an  efl&cient  body  of  river  police  along 
the  lines  of  the  river  even  where  it  might  run  within  two 
miles  of  the  railway.  The  right  of  foreign  troops  to 
occupy  summer  quarters  was  also  to  be  recognized  by 
the  Chinese. 

These  proposals  were  accepted  by  the  Chinese  Govern- 
ment with  the  interpretative  reservation  that  the  mili- 
tary control  along  the  railway  should  relate  only  to  of- 
fenses against  the  railroad  or  telegraph  lines,  or  against 
the  allies  or  their  property. 

"  For  the  correspondence  in  regard  to  this  arrangement  and  the  military 
control  of  the  railway  from  Peking  to  Shanhaikuan  in  1912,  see  the  note 
to  Article  IX  of  the  Boxer  Protocol  as  printed  in  MacMurray,  No,  1901/3. 


CONCESSIONS  AND  SETTLEMENTS  223 

During  the  revolutionary  troubles  of  1911-1912  the 
Treaty  Powers  deemed  it  necessary  to  institute  military 
control  over  the  Peking-Mukden  railway  as  far  as  Shan- 
haikuan.  This  control  is  still  continued.  At  the  time  the 
road  was  taken  under  control  by  the  Powers,  different  sec- 
tions of  it  were  allocated  to  the  different  Powers,  each  of 
which  was  made  responsible  for  the  guarding  of  its  sec- 
tion. These  allocations,  roughly  speaking,  were  as 
follows:  Peking  (Fengtai  Junction)  to  Tientsin,  to 
Great  Britain ;  Tientsin  and  a  small  section  eastward,  to 
France ;  the  branch  line  to  Taku,  to  Italy ;  the  Tientsin- 
Shanhaikuan  section  was  divided  among  the  Germans, 
Americans  and  Japanese.  During  the  Great  War  the 
French  section  was  turned  over  to  the  Japanese ;  and  the 
German  section  to  the  Americans.  The  control  now  exer- 
cised by  the  British  over  their  section  is  represented  by 
only  a  few  small  posts. 

APPENDIX  A  TO  CHAPTER  V 
TIENTSIN 


The  following  succinct  statement  of  concessional  conditions  at 
Tientsin  is  given  by  Morse,  The  Trade  and  Administration  of 
China,  p.  216. 

"  Tientsin  is  rich  in  *  concessions '  for  residence  and  foreign 
trade,  having  no  less  than  thirteen — viz.,  British  (1860),  British 
Extension  (1897),  British  Extra-mural  Extension  (1900),  French 
(1861),  French  Extension  (1900),  American  (granted  in  1861, 
but  at  once  abandoned  and  in  1902  added  to  the  British  Conces- 
sion), German  (1895),  German  Extension  (1901),  Japanese 
(1896),  Japanese  Extension  (1900),  Austro-Hungarian  (1902), 
Itahan  (1901),  Russian  (1900),  and  Belgian  (1902).  The 
last  four  and  the   various   extensions,   except   the   British   date 


224      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

from  1900  and  later.  The  original  concession,  the  British, 
dating  from  1860,  is  held  under  a  lease  in  perpetuity  to  the 
British  government,  a  small  ground-rent  being  reserved  to  show 
the  ultimate  sovereignty  of  China.  The  area  was  divided  into 
lots,  the  leases  of  which  were  sold  to  provide  for  roads  and 
bunding,  and  which  are  held  under  a  ninety-nine  years'  lease 
granted  by  the  British  government,  the  annual  rental  being  the 
due  proportion  of  the  reserved  ground-rent.  The  Consul  is  ex 
officio  the  ruling  functionary ;  all  actions  of  the  Municipal  Council, 
elected  by  vote  of  the  'land-renters,'  being  submitted  for  his  ap- 
proval, and  the  annual  *town  meeting'  or  any  special  meeting 
being  held  under  his  presidency.  The  residence  of  Chinese  on  the 
concession  being  prohibited,  otherwise  than  as  servants  of  the  for- 
eign residents,  the  Consul  has  jurisdiction  over  all  questions  of 
landed  property,  and  over  all  other  questions  in  which  a  non- 
British  European  is  not  defendant.  The  Consul,  as  representative 
of  his  government,  is  de  jure  ruler  of  the  concession ;  but,  in  con- 
formity with  English  practice,  he  actively  intervenes  only  in  a 
crisis,  and  ordinarily  the  duly-elected  Municipal  Councillors  are 
de  facto  rulers  of  a  self-constituted  little  republic.  In  the  other 
concessions  nomination,  and  not  election,  decides  the  choice  of 
councillors.  For  the  French  concession  the  Municipal  Council 
consists  of  the  Consul  as  ex  officio  President,  the  six  land-owners 
paying  the  highest  taxes,  and  the  three  tenants  paying  the  highest 
rent.  Germany  in  1897  contracted  with  a  commercial  S3rndicate 
to  develop  and  administer  her  concession;  and  in  1895  the  Reich- 
stag passed  an  enabling  Act  to  allow  self-government  when  desired. 
On  the  Japanese,  Russian,  Belgian,  and  Italian  concession  the 
Consul  is  sole  administrator.  On  the  Austro-Hungarian  conces- 
sion there  is  little  if  any  Austrian  or  Hungarian  interest,  the  land- 
owners and  inhabitants  being  Chinese ;  and  here  the  power  is  vested 
in  an  Administrative  Secretary,  nominated  by  the  Consul,  and  in 
six  of  the  leading  Chinese  residents,  also  nominated.  Of  the  Ex- 
tensions, the  French,  German  and  Japanese  are  merely  extensions 
of  the  original  concessions,  held  in  the  same  way  under  lease  in 
perpetuity  to  the  foreign  power.  In  the  British  Extension,  which 
was  the  first,  a  different  principle  was  foUowed.    The  soil  remains 


CONCESSIONS  AND  SETTLEMENTS  235 

Chinese,  and  title-deeds  are  sealed  and  issued  by  the  Chinese 
authorities  as  at  Shanghai,  and  as  at  Shanghai  it  is  only  admin- 
istrative functions — taxing,  works  and  police — which  are  delegated 
by  the  sovereign  power.  The  Municipal  Council,  in  its  corporate 
capacity,  and  the  'land-renters'  of  the  British  Concession  own  a 
considerable  portion  of  the  land  in  its  extension,  and  the  Munici- 
pal Council  of  the  extension  is  composed  of  the  members  elected 
to  the  Municipal  Council  of  the  concession,  ex  officio,  and  four 
others  elected  ad  hoc.  This  makes  it  possible,  while  having  sepa- 
rate budgets,  to  carry  on  the  administrative  work  of  th^  two  areas 
with  a  staff  common  to  both.  In  the  foreign  residential  section 
of  Tientsin,  with  a  total  area  of  3,550  acres,  of  which  28  per  cent, 
is  in  the  Eussian  Concession,  we  have  thus  six  distinct  forms  of 
government  under  eight  European  powers." 

APPENDIX  B  TO  CHAPTEE  V 
SHANGHAI 


The  following  description  of  Shanghai  is  given  by  Morse,  Trade 
and  Administration  of  China,  p.  244. 

"  Shanghai  is  mentioned  in  history  2,150  years  ago,  and  900 
years  ago  was  a  mart  of  sufficient  importance  to  be  made  a  customs 
station.  It  was  occupied  in  1842  by  the  British  forces  on  their 
way  to  Nanking,  and,  having  been  declared  a  treaty  port  by  the 
treaty  of  Nanking,  was  formally  opened  to  trade  on  Noveniber 
17th,  1843.  The  first  district  to  be  occupied  for  foreign  residence 
was  selected  by  the  British  authorities,  bounded  on  the  south  by 
the  Yangkingpang,  a  ditch  running  east  and  west  a!bout  a  quarter- 
mile  north  of  the  Chinese  city,  on  the  north  by  the  Soochow  Creek, 
on  the  east  by  the  Hwangpu,  and  on  the  west  by  Defence  Creek 
dug  at  one  mile  distant  from  the  Hwangpu,  enclosing  an  area  of 
470  acres  with  a  river  frontage  of  three-fourths  of  a  mile.  In  1849 
the  French  authorities  delimited  an  area  between  the  Yangking- 
pang and  the  city,  and  in  1853  obtained  in  extension  the  narrow 
strip  lying  between  the  city  and  the  river,  having,  with  narrow 
depth,  a  river  frontage  of  nearly  three-fourths  of  a  mile.  The 
15 


226      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Americans  occupied  the  district  called  Hongkew,  lying  north  of 
the  Soochow  Creek,  with  frontage  on  that  creek  and  on  the  river, 
including  the  most  narrow  part  of  the  wharfage  of  Shanghai.  This 
American  Settlement  was  in  1863  amalgamated  with  the  British 
Settlement,  both  governments  waiving  their  exclusive  rights  and 
thereby  creating  the  seH-goveming  republic  styled  'The  Foreign 
Community  of  Shanghai,  North  of  the  Yangkingpang,'  the  French 
Government  having  refused  to  surrender  its  jurisdiction  over  the 
so-called  '  Concession  Frangaise.'  In  1899  these  various  settle- 
ments were  extended,  and  the  authority  of  the  Municipal  Council 
of  the  'International  Settlement,'  as  it  is  called  for  short,  now 
extends  over  5,584  acres,  while  the  present  area  of  the  '  Concession 
Frangaise '  is  358  acres. 

.  .  .  .  "  The  resident  population  under  the  French  Municipality 
in  1905  was  831  foreigners  (including  274  French,  109  British, 
47  German,  73  Japanese)  and  84,792  Chinese.  By  whatever  name 
they  are  called,  and  whatever  the  minor  differences  in  their  form 
of  government,  the  several  *  reserved  areas '  at  Shanghai,  whether 
British,  French  or  American,  or  International,  are  not  concessions 
such  as  exist  at  Tientsin,  Hankow,  and  Canton,  w^here  a  grant  has 
been  made  by  a  lease  in  perpetuity  from  the  government  of  China 
to  the  foreign  Power,  and  where  the  '  land-renter '  holds  under  a 
title-deed  issued  by  the  foreign  lessee  Power,  and  registered  only 
at  the  Consulate  of  that  Power.  They  are  '  Settlements,'  reserved 
areas  within  which  foreigners  are  permitted  to  acquire  land,  in 
which  Chinese  may  continue  to  hold  land,  in  which  foreigners  ac- 
quire land  by  direct  negotiation  with  the  original  owners — ^for  such 
land  a  bill  of  sale  is  not  issued,  but  it  is  held  under  'perpetual 
lease,'  sealed  and  issued  by  the  Chinese  territorial  authority;  and 
this  title-deed  may  be  registered  at  any  Consulate,  ordinarily  that 
of  the  land-renter,  and  not  compulsorily  at  that  of  the  titular  con- 
trolling Power.  The  Settlement  has  complete  self-governing 
power,  including  the  power  of  taxation  and  police ;  but  the  systems 
on  the  two  sides  of  the  Yangkingpang  differ.  They  are  alike  only 
in  not  granting  the  franchise  to  Chinese,  who  are  considered  to 
be  residents  of  the  Foreign  Settlements  by  sufferance,  a  sufferance 
dating  from  the  time  when  they  came  by  thousands  as  refugees 


CONCESSIONS  AND  SETTLEMENTS  227 

from  the  Taipings,  and  found  under  the  foreign  flags  the  safety 
they  could  not  find  under  their  own. 

"  The  first  Land  Kegulations  for  the  British  Settlement  were 
drawn  up  in  1845,  with  a  '  Committee  of  Boads  and  Jetties'  nomi- 
nated by  the  Consul.  These,  as  amended  in  1854  and  approved 
by  the  Chinese  authorities,  extended  the  privilege  of  acquiring 
land  within  the  Settlement  to  aU  foreigners;  and  when  in  1863 
the  British  and  American  Settlements  were  united,  the  Municipal 
Council,  first  elected  in  1855,  became  the  Municipal  Council  of  the 
Settlement  with  the  long  name  mentioned  before.  The  land  regu- 
lations were  last  amended  in  1898,  and,  having  received  the  assent 
of  the  foreign  Ministers  at  Peking,  are  now  the  governing  charter 
of  the  commtmity.  The  electora;te  consists  of  all  householders  who 
pay  rates  on  an  assessed  rental  of  Tls.  500  a  year,  and  owners  of 
land  valued  at  Tls.  500.  The  French  Municipality  was  organized 
in  1862;  the  electorate  consists  of  all  owners  of  land,  occupants 
paying  a  rental  of  1,000  francs  a  year,  and  residents  having  an 
income  of  4,000  francs  a  year ;  and  the  Municipal  Council  is  under 
the  presidency  of  the  French  Consul-General,  whose  assent  is 
necessary  for  the  validity  of  its  decisions.  Under  these  forms  of 
government  the  place  has  grown  in  weailth,  the  International 
Settlement,  built  up  by  British,  American,  and  Grerman  enterprise, 
naturally  more  rapidly  than  the  French. 

"  In  the  international  Settlement  at  Shanghai,  the  various  Chi- 
nese commercial  bodies  elect  three  Chinese  delegates  as  the  author- 
ized persons  with  whom  the  Council  may  consult  regarding  affairs 
of  the  Chinese  residents." 

For  a  more  extended  account  of  the  government  of  Shanghai, 
and  its  historical  development,  see  Morse's  International  Relations 
of  the  Chinese  Empire,  Vol.  ij.  Chapter  vi. 

At  the  present  time  (1920),  the  Chinese  dwelling  within  the 
International  Settlement  are  urging  that  they  be  given  a  certain 
amount  of  participation  in  the  government  of  the  area  of  whose 
population  they  constitute  a  so  considerable  portion,  and  in  which 
they  own  and  pay  taxes  upon  so  much  property. 

The  "  Status  of  the  Shanghai  Municipality "  is  interestingly 
discussed  by  E.  S.  Gundry,  C.  B.,  in  The  Journal  of  Comparative 
Legislation  and  International  Law,  3d.  Series,  January  1920. 


CHAPTER   Vin 

Leased  Aeeas 


In  later  chapters  dealing  with  the  situation  in  Man- 
churia and  Shantung  we  shall  have  occasion  to  consider 
in  more  detail  conditions  in  the  leased  areas  of  Kiaochow 
and  the  Liaotung  peninsula.  In  the  present  chapter  we 
shall  be  concerned  simply  with  the  circumstances  under 
which  the  leases  were  obtained  and  with  their  terms. 

Kiaochow.  As  early  as  the  spring  of  1897  Germany 
had  made  known  to  the  other  Powers  her  desire  to  obtain 
a  naval  station  on  the  coast  of  China  and  soon  after  sent 
surveying  parties  along  the  coasts  of  Fukien,  Chekiang, 
and  Shantung.* 

On  November  1,  1897,  two  Eoman  Catholic  mission- 
aries, subjects  of  Germany,  were  murdered  by  a  band  of 
robbers  who  were  plundering  a  Shantung  village.  Al- 
though there  had  been  no  claim  of  complicity  on  the  part 
of  the  Chinese  authorities,  or  clear  evidence  that  the 
priests  ^  had  been  killed  because  of  their  foreign  nation- 
ality, and  despite  the  fact  that  the  Chinese  Government 
took  prompt  steps  to  apprehend  and  punish  those  guilty 
of  or  responsible  for  the  killing,  the  German  Government 
took  such  immediate  and  energetic  action  that  it  was 
apparent  that  it  had  been  but  waiting  until  some  event 

*  Cf.  Morse,  Int.  Rels.  of  Chinese  Empire,  Vol.  in,  p.  106. 
•The  murdered  men  were  Jesuit  priests  and  therefore  members  of  an 
order  that  was  excluded  from  Germany. 

228 


LEASED  AEEAS  229 

should  occur  which  would  furnish  it  with  a  bare  color 
of  right  to  demand  of  China  a  territorial  foothold  within 
its  dominions.  Within  less  than  a  week  after  the  murder 
became  known  and  less  than  a  fortnight  after  it  had 
occurred,  a  German  force  had  landed  at,  and  taken  pos- 
session of,  the  port  of  Tsingtao ;  and  eight  days  later,  the 
German  Government  presented  to  China  a  formidable 
list  of  demands,  which  were  soon  supported  by  the  naval 
expedition  sent  to  the  East  under  the  command  of  Prince 
Heinrich,  the  brother  of  the  Kaiser. 

These  demands  were  six  in  number  and  as  follows : 

1.  That  a  tablet  be  erected  by  the  Chinese  Imperial 
government  in  memory  of  the  murdered  priests. 

2.  That  an  indemnity  be  paid. 

3.  That  the  Governor  of  Shantung  be  dismissed  from 
the  public  service. 

4.  That  expenses  incurred  in  the  occupation  of  Tsing- 
tao be  repaid. 

5.  That  to  Germans  be  given  the  sole  right  to  con- 
struct railways  and  to  open  coal  mines  in  the  Province 
of  Shantung. 

6.  That  Germany  be  granted  a  naval  station  at  Kiao- 
chow. 

It  would  appear  that  Great  Britain  was  not  aware  of 
the  fact  that  this  sixth  demand  had  been  made.  Had  she 
known  it,  it  is  almost  certain  that  she  would  have  pro- 
tested to  the  Chinese  against  its  being  granted,  for  she 
was  at  that  time  and  has  since  been  opposed  to  the  ces- 
sion of  Chinese  territory  to  foreign  nations.  As  it  was, 
she  objected  to  the  grant  to  Germany  of  the  commercial 
privileges  that  were  asked  for,  and  notified  the  Chinese 
Government  that  while  she  advised  the  granting  of  the 


230      rOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

first  four  of  Germany's  demands,  tlie  British  Govern- 
ment would  *'  feel  themselves  compelled,  if  the  fifth  point 
is  conceded,  to  demand  equality  of  treatment  for  British 
subjects  under  the  most  favored  nation  clause  of  the 
treaties,  and  compensation  will  be  demanded  on  points 
in  respect  to  which  rights  secured  by  treaty  have  been 
disregarded. ' '  ^  Again,  a  few  days  later,  the  British  Min- 
ister to  China  was  instructed  to  say  that  the  British  Gov- 
ernment would  object  to  any  concession  to  Germany  of 
exclusive  commercial  privileges.  ' '  It  was  at  this  stage, ' ' 
says  Morse,  **  that  the  British  envoy  was  told  by  the 
Chinese  ministers  that  the  'absence  of  any  assurance  that 
Kiaochow  would  be  evacuated  if  the  demands  were  con- 
ceded was  delaying  the  negotiations,  and  that  Germany 
had  asked  for  a  coaling  station,'  but  it  was  only  when 
the  demands  were  *  all  practically  agreed  to  '  that  he 
learned  that  the  cession  of  territory  on  Kiaochow  Bay 
was  to  be  the  '  guarantee  for  future  good  behavior. ' ' '  By 
this  time,  as  Morse  points  out,  the  matter  of  the  lease 
had  gone  too  far  to  be  stopped  unless  Great  Britain  was 
willing  to  use  force,  which  she  was  not. 

Without  foreign  support,  China  was  helpless  and  had 
no  option  but  to  sign  the  convention  of  March  6,  1898,* 
which  provided  for  the  lease  for  ninety-nine  years  of  the 
Bay  of  Kiaochow  and  surrounding  territory,  together 
with  important  railway  and  mining  rights  in  Shantung 
which  will  be  more  particularly  described  in  a  later 
chapter. 

In  connection  with  this  lease  of  Kiaochow  it  may  also 

•Lord  Salisbury  to  Sir  C.  MacDonald,  Nov.  3,  Dee.  8,  1897.     "China" 
No.  1,  1898,  pp.  3,  7.     Cited  by  Morse,  Int.  Rels.,  m,  p.  113. 
*For  text,  see  xvIacMurray,  No.  1898/4. 


LEASED  AREAS  231 

be  mentioned  that  Russia  had  had  Kiaochow  in  mind  as 
an  Eastern  ice-free  port,  and,  possibly,  had  received  from 
the  Chinese  some  more  or  less  definite  assurances  that 
it  might  be  obtained.  The  lease  to  Germany  was  there- 
fore in  derogation  of  whatever  claims  upon  the  place 
Russia  may  have  had.  This  fact  gave  some  additional 
weight  to  the  demand  which  Russia  was  soon  to  make  for 
the  lease  of  the  Liaotung  peninsula  with  the  harbor  of 
Port  Arthur. 

Dr.  E.  J.  Dillon  who  is  known  to  have  had  exceptional 
opportunities  of  knowing  the  inside  facts  of  Russia's  for- 
eign politics,  and  who  was  on  terms  of  intimate  acquaint- 
ance with  many  of  the  public  men  of  that  country,  and 
especially  with  M.  Witte,  in  his  recently  published  vol- 
ume The  Eclipse  of  Russia  (published  in  1918)  gives  an 
interesting  account  of  the  circumstances  under  which 
Germany  obtained  the  Czar's  approval  of  her  project  to 
lease  Kiaochow.  Germany,  says  Mr.  Dillon,  had  expected 
to  receive  payment  from  China  when,  in  participation 
with  Russia  and  France,  she  forced  Japan  to  retrocede 
the  Liaotung  peninsula  to  China,  and  was  disappointed 
when  she  was  not  admitted  to  participation  in  the  Rus so- 
Chinese  Bank  which,  as  will  presently  be  noted,  was  estab- 
lished to  acquire  control  of  financial  and  economic  inter- 
ests in  China.  This  exclusion  increased  Germany's  de- 
termination to  obtain  compensation  in  the  form  of  a 
foothold  upon  the  coast  of  China.  This  project  was  not 
favored  by  M.  Witte  whose  Far  Eastern  policy  involved 
the  maintenance  of  China's  territorial  integrity  and  the 
advancement  of  Russia's  interests  by  means  of  peaceful 
economic  penetration.  He  therefore  was  greatly  surprised 
and  disturbed  when  he  learned  that  the  German  Kaiser, 


232      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

upon  the  occasion  of  a  visit  to  the  Czar,  had  obtained 
from  him  the  pledge  that  the  lease  of  Kiaochow  by  Ger- 
many would  not  be  objected  to  by  Eussia.  Mr.  Dillon 
reports  the  conversation  between  the  two  monarchs  as 
follows : 

"  In  the  course  of  conversation  with  Nicholas  the  Kai- 
ser suddenly  broke  away  from  the  ordinary  topics  and 
exclaimed,  *  I  want  you  to  do  me  a  favor — As  you  know, 
I  am  badly  in  need  of  a  port.  My  fleet  has  no  place 
worthy  of  the  name  outside  my  Empire.  And  why  should 
it  be  debarred?  That  may,  perhaps,  serve  the  purposes 
of  covert  enemies,  but  not  Russians.  I  know  your 
friendly  sentiment  towards  me  and  my  dynasty.  I  want 
you  to  say  frankly,  have  you  any  objection  to  my  leasing 
Eaaochow  in  China?  What  name  did  you  say?  Kiao- 
chow. No — none.  I  see  no  objection  whatever.  The 
Kaiser  thanked  his  host  profusely  and  the  imperial  pair 
drove  to  the  palace. ' '  ^ 

Later,  as  Mr.  Dillon  reports,  the  Czar  much  regretted 
his  promise,  and  declared  that  the  Kaiser  had  played  a 
nasty  trick  on  him,  by  thus  inducing  him  to  make  an 
unconsidered  promise,  but  that,  having  given  his  word, 
he  was  not  willing  to  go  back  upon  it. 

From  the  published  Memoirs  of  M.  Gerard,  who  was 
the  French  Minister  at  Peking,  it  would  appear  that 
France  also  was  not  favorable  to  Germany's  project  to 
obtain  a  territorial  foothold  in  China,  but,  her  ally  Russia 
having  consented,  was  not  in  a  position  to  press  her  own 
objection. 


'  Op.  cit,  p.  248. 


LEASED  AREAS  233 

Sino-German  Convention  of  1898.  Article  II  of  the 
treaty  of  1898  read  as  follows: 

With  the  intention  of  meeting  the  legitimate  desire  of  His 
Majesty  the  German  Emperor,  that  Germany  like  other  Powers 
should  hold  a  place  on  the  Chinese  coast  for  the  repair  and  equip- 
ment of  her  ships,  for  the  storage  of  materials  and  provisions  for 
the  same,  and  for  other  arrangements  connected  therewith.  His 
Majesty  the  Emperor  of  China  cedes  to  Germany  on  lease,  pro- 
visionally for  ninety-nine  years,  both  sides  of  the  entrance  to  the 
Bay  of  Eaaochow.  Germany  engages  to  construct,  at  a  suitable 
moment,  on  the  territory  thus  ceded  fortifications  for  the  protection 
of  the  buildings  to  be  constructed  there  and  of  the  entrance  to  the 
harbor. 

By  Article  III  the  limits  of  the  ceded  area  were  set 
out,  and  the  undertaking  made  that  **  in  order  to  avoid 
the  possibility  of  conflicts,  the  Imperial  Chinese  Govern- 
ment will  abstain  from  exercising  rights  of  sovereignty 
in  the  ceded  territory  during  the  term  of  the  lease,  and 
leaves  the  exercise  of  the  same  to  Germany. ' '  ^ 

By  this  Article  it  was  also  provided  that  **  Chinese 
ships  of  war  and  merchant  vessels  shall  enjoy  the  same 
privileges  in  the  Bay  of  Kiaochow  as  the  ships  of  other 
nations  on  friendly  terms  with  Germany;  and  the 
entrance,  departure,  and  sojourn  of  Chinese  ships  in  the 
bay  shall  not  be  subject  to  any  restrictions  other  than 
those  which  the  Imperial  German  Government,  in  virtue 
of  the  rights  of  sovereignty  over  the  whole  of  the  water 
area  of  the  bay  transferred  to  Germany,  may  at  any  time 
find  it  necessary  to  impose  with  regard  to  the  ships  of 
other  nations." 

"  No  dues  are  to  be  demanded  of  Chinese  war  or  mer- 

•  The  area  leased  amounted  to  about  200  square  miles,  not  including  the 
Bay  and  islands. 


234      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

chant  ships  in  the  bay  except  such  as  may  be  levied  upon 
other  vessels  for  maintaining  the  necessary  harbor  ar- 
rangements and  quays."    (Art.  IV.) 

In  Article  V  it  was  provided  that  '*  should  Germany 
at  some  future  time  express  the  wish  to  return  Kiaochow 
Bay  to  China  before  the  expiration  of  the  lease,  China 
engages  to  refund  to  Germany  the  expenditure  she  has 
incurred  at  Kiaochow,  and  to  cede  to  Germany  a  more 
suitable  place.'* 

**  Germany  engages  at  no  time  to  sublet  the  territory 
leased  from  China  to  another  Power."  The  significance 
of  this  provision  in  connection  with  the  transfer  to  Japan 
of  the  German  rights — a  matter  later  to  be  discussed — is 
readily  seen.  Also,  in  connection  with  the  claims  which 
Japan  has  made  upon  China  with  reference  to  rights  in 
Shantung,  it  is  to  be  noted  that  by  an  agreement  of 
November  28,  1905,  between  the  German  and  Chinese 
Governments,  it  was  provided  that  the  German  troops 
should  be  withdrawn  from  the  cities  of  Kiaochow  and 
Kaomi,  and  that  the  policing  of  the  railways  within  the 
fifty  kilometre  zone  should  revert  to  the  Chinese  local 
authorities  and  police. 

In  other  articles  of  the  treaty  Germany  engaged  to 
construct  the  necessary  navigation  signals  on  the  islands 
and  shallows  at  the  entrance  of  the  bay,  to  give  the  protec- 
tion of  the  German  Government  to  all  Chinese  living  in 
the  ceded  area  so  long  as  they  should  behave  in  con- 
formity with  law  and  order,  and  they  were  to  be  allowed 
to  remain  within  the  area  * '  unless  their  land  is  required 
for  other  purposes  ' '  in  which  case  they  were  to  receive 
compensation  therefor. 

As  will  be  pointed  out  in  a  later  chapter  dealing  with 


LEASED  AEEAS  235 

the  Open  Door  policy  in  China,  Germany  in  response  to 
the  letter  of  the  American  Secretary  of  State  pledged 
herself  not  to  use  her  Shantung  rights  in  derogation  of 
the  principle  of  **  absolute  equality  of  treatment  of  all 
nations  with  regard  to  trade,  navigation,  and  commerce. ' ' 

In  an  earlier  section  the  arrangement  between  the 
German  authorities  and  the  Imperial  Maritime  Customs 
Service  of  China  with  regard  to  customs  duties  and  cus- 
toms administration  has  been  described. 

Around  the  ceded  area,  it  was  provided  by  Article  I 
there  should  be  a  zone  of  50  kilometres  (100  Chinese  li) 
over  which  the  German  troops  should  have  free  passage 
at  any  time,  but  within  which  the  Chinese  Government, 
while  reserving  all  rights  of  sovereignty  was  '  *  to  abstain 
from  taking  any  measures,  or  issuing  any  ordinances 
therein,  without  the  previous  consent  of  the  German 
Government,  and  especially  to  place  no  obstacle  in  the 
way  of  any  regulation  of  the  water-courses  which  may 
prove  to  be  necessary.  His  Majesty  the  Emperor  of 
China,  at  the  same  time,  reserves  to  himself  the  right 
to  station  troops  within  that  zone,  in  agreement  with 
the  German  Government,  and  to  take  other  military 
measures." 

The  matter  of  customs  within  the  neutral  zone  was 
provided  for  by  the  following  clause  of  Article  V: 

As  regards  the  re-establishment  of  Chinese  customs  stations 
which  formerly  existed  outside  the  ceded  territory,  but  within  the 
50-kilom.  zone,  the  Imperial  German  Grovernment  intends  to  come 
to  an  agreement  with  the  Chinese  Government  for  the  definitive 
regulation  of  the  custom  frontier,  and  the  mode  of  collecting  cus- 
toms duties,  in  a  manner  which  will  safeguard  all  the  interests 
of  China,  and  proposes  to  enter  into  further  negotiations  on  the 
subject. 


236      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  provisions  of  the  treaty  of  1898  with  reference  to 
the  railway  and  mining  rights  in  Shantung  granted  to 
Germany  wiU  be  discussed  in  a  later  chapter  in  which 
*  *  Spheres  of  Interest ' '  in  China  are  discussed. 

In  1900,  during  the  Boxer  uprising,  Germany  stationed 
permanent  garrisons  in  the  cities  of  Kiaochow  and 
Kaomi.  To  this  China  objected  as  being  an  exercise  of  a 
right  which  she  had  not  granted,  and,  in  pursuance  of  an 
understanding  arrived  at  on  November  28,  1905,  these 
garrisons  were  withdrawn,  and  China  resumed  the 
policing  of  the  German  railways,  but  the  right  of  Ger- 
many, upon  notification  to  the  Chinese  authorities,  to 
send  troops  into  the  neutral  zone  for  temporary  pur- 
poses, was  reaffirmed^ 

Liaotung  Peninsula.  Just  three  weeks  after  the  lease 
of  Kiaochow  China  found  herself  obliged  to  lease  to 
Russia,  for  twenty-five  years,  the  harbors  of  Port  Arthur 
and  Talienwan  (renamed  Dalny  by  the  Russians,  and  still 
later  Dairen  by  the  Japanese)  and  adjacent  waters.  The 
purpose  of  this  lease,  as  declared  by  the  treaty  of  March 
27,  1898,  was  to  give  protection  to  the  Russian  fleet  and 
to  enable  it  to  have  a  secure  base  on  the  north  coast  of 
China.  But,  it  was  declared,  the  lease  was  in  no  way  to 
violate  the  sovereignty  of  China  in  the  territory. 

By  Article  IV  of  this  agreement  it  was  provided  that : 

During  the  above-mentioned  period,  in  the  territory  leased  by  the 
Russian  Government  and  its  adjacent  water  area,  the  entire  mili- 
tary command  of  the  land  and  naval  forces  and  equally  the  supreme 
civil  administration  will  be  entirely  given  over  to  the  Russian 
authorities  and  will  be  concentrated  in  the  hands  of  one  person  who 

'  For  text  of  this  agreement  of  1905,  see  note  to  Article  I  of  the  treaty 
as  printed  in  MacMurray,  No.  1898/4. 


LEASED  AREAS  237 

shall  not  have  the  title  of  governor  or  governor  general.  No 
Chinese  military  land  forces  whatsoever  will  be  allowed  on  the  terri- 
tory specified.  Chinese  inhabitants  retain  the  right,  as  they  may 
desire,  either  to  remove  beyond  the  limits  of  the  territory  leased  by 
Eussia  or  to  remain  within  such  limits  without  restriction  on  the 
part  of  the  Eussian  authorities.  In  the  event  of  a  Chinese  subject 
committing  any  crime  within  the  limits  of  the  leased  territory,  the 
offender  will  be  handed  over  to  the  nearest  Chinese  authorities  for 
trial  and  punishment  in  accordance  with  Chinese  laws,  as  laid  down 
in  Article  VIII  of  the  Treaty  of  Peking  of  1860.« 

A  neutral  strip  to  the  north  of  the  leased  area  was 
provided  for  by  Article  V.  **  Within  this  specified 
neutral  zone  the  civil  administration  will  be  entirely  in 
the  hands  of  the  Chinese  autborities ;  Chinese  troops  will 
be  admitted  within  this  zone  only  witb  the  consent  of  the 
Russian  authorities." 

By  other  Articles  of  the  treaty  it  was  provided  that 
Port  Arthur  should  be  solely  a  naval  port,  only  Russian 
and  Chinese  vessels  to  be  allowed  to  use  it,  and  to  be  con- 
sidered a  closed  port  so  far  as  the  war  and  merchant 
vessels  of  the  other  Powers  were  concerned. 

However,  as  to  Talienwan,  it  was  provided  that,  with 
the  exception  of  a  part  of  the  port  which  was  to  have  the 
same  status  as  Port  Arthur,  the  place  was  to  be  a  trading 
port  where  the  merchant  vessels  of  all  countries  might 
freely  come  and  go. 

Russia  engaged  herself  to  supply  the  funds  for,  and 
herself  to  erect  what  buildings  might  be  required  for 
naval  or  military  forces,  and  to  construct  batteries  or 
barracks  for  the  garrisons  at  such  places  as  she  might 
desire.® 

» MacMurray,  No.  1898/5. 

*  The  text  of  this  treaty  given  by  Rockhill  is  from  a  Chinese  prScis.  The 
Eussian  text  was  published  by  the  Russian  Foreign  Office  in  the  Recueil 


238      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  treaty  of  lease  of  March  27,  1898,  was  supple- 
mented by  the  agreement  of  May  7,  1898,  which  fixed  the 
definite  limits  of  area  ceded,  and  contained  the  agreement 
upon  the  part  of  the  Chinese  Government  (Art.  V) : 

1.  That  without  Russia's  consent  no  concession  will  be  made  in 
the  neutral  ground  for  the  use  of  subjects  of  other  Powers. 

2.  That  the  ports  on  the  sea-coast  east  and  west  of  the  neutral 
ground  shall  not  be  opened  to  the  trade  of  other  Powers. 

3.  And  that  without  Russia's  consent  no  road  and  mining  con- 
cessions, industrial  and  mercantile  privileges  shall  be  granted  in  the 
neutral  .territory.^"* 

Kuangchouwan.  The  example  having  been  set  by  Ger- 
many and  Eussia,  France  soon  followed  suit  and  helpless 
China  was  obliged  to  lease  to  that  country  for  ninety-nine 
years  the  port  of  Kuangchouwan,  opposite  the  island  of 
Hainan,  as  a  "  naval  station  with  coaling  depot. ' ' 

The  convention  was  submitted  to  the  Tsung-li  Yamen 
on  May  27,  1898,  and  ratified  by  China  on  February  19, 
1900,  and  expressly  provided  that  it  should  be  understood 
that  the  lease  did  **  not  offset  the  sovereign  rights  of 
China  over  the  territory  ceded." 

The  important  clauses  of  this  convention  read  as 
follows : 

Article  III.  The  territory  shall  be  governed  and  administered 
during  the  ninety-nine  years  of  the  lease  by  France  alone,  so  that 
all  possible  misunderstanding  between  the  two  countries  shall  be 
obviated. 

The  inhabitants  shall  continue  to  enjoy  their  property;  they  may 

dea  Traites  concemcmt  VExtrSme  Orient.  The  Russian  and  Chinese  versions 
are  given  in  the  Customs  Treaties.    The  text  given  by  MacMurray  is  a 
translation  from  the  Eussian  text  in  the  Recneil. 
"  Translation  in  MacMurray,  No.  1898/9. 


LEASED  AREAS  239 

continue  to  inhabit  the  leased  territory  and  pursue  their  labors  and 
occupations,  under  the  protection  of  France,  so  long  as  they  respect 
its  laws  and  regulations.  France  shall  pay  an  equitable  price  to 
the  native  property  owners  for  the  land  which  it  may  wish  to 
acquire. 

Article  IV.  France  may  erect  fortifications,  place  garrisons  of 
troops  or  take  any  other  defensive  measure  on  the  leased  land. 

She  may  erect  lighthouses,  set  buoys  and  signals  useful  for  navi- 
gation on  the  leased  territory,  along  the  islands  and  coasts,  and,  in 
a  general  way,  take  all  measures  and  adopt  all  plans  to  insure  the 
freedom  and  safety  of  navigation. 

Article  V.  Steamers  of  China  as  well  as  the  ships  of  the  Powers 
having  diplomatic  and  commercial  relations  with  her,  shall  be 
treated  within  the  leased  territory  in  the  same  manner  as  in  the 
opened  ports  of  China.^^ 

France  may  issue  all  regulations  she  may  wish  for  the  adminis- 
tration of  the  territory  and  of  the  ports  and  particularly  levy  light- 
house and  tonnage  dues  destined  to  cover  the  expense  of  erecting 
and  keeping  up  lights,  beacons  and  signals,  but  such  regulations 
and  dues  shall  be  impartially  used  for  ships  of  all  nationalities. 

Article  VI.  If  cases  of  extradition  should  occur,  they  shall  be 
dealt  with  according  to  the  provisions  of  existing  conventions  be- 
tween France  and  China,  particularly  those  regulating  the  neigh- 
boring relations  between  China  and  Tongking.^^ 

Eowloon,  Mirs  Bay  and  Deep  Bay.  On  June  9,  1898, 
Great  Britain  obtained  from  China,  as  *'  an  extension  of 
Hongkong  territory  "  and  necessary  for  its  *'  proper 
defence  and  protection, ' '  a  lease  for  ninety-nine  years  of 
certain  islands,  a  portion  of  the  mainland  opposite 
Hongkong,  and  Mirs  Bay. 

"  Kuangchouwan  was  made  a  "  free  port "  by  France  soon  after  the 
lease  was  effected. 
"  MacMurray,  No.  1898/10. 


240      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

It  is  at  the  same  time  agreed  (the  Convention  reads)  that  within 
the  city  of  Kowloon  the  Chinese  officials  now  stationed  there  shall 
continue  to  exercise  jurisdiction  as  far  as  may  be  consistent  with 
military  requirements  for  the  defence  of  Hongkong.^'  Within  the 
remainder  of  the  newly  leased  territory  Great  Britain  is  given  sole 
jurisdiction.  Chinese  officials  and  people  are  to  be  allowed  as 
heretofore  to  use  the  road  from  Kowloon  to  Hsinan. 

It  is  further  agreed  that  the  existing  landing  place  near  Kowloon 
city  shall  be  reserved  for  the  convenience  of  Chinese  men-of-war, 
merchant  and  passenger  vessels,  which  may  come  and  go  and  lie 
there  at  their  pleasure;  and  for  the  convenience  of  movement  of 
the  officials  and  people  within  the  city. 

When  hereafter  China  constructs  a  railway  to  the  boundary  of 
the  Kowloon  territory  under  British  control,  arrangements  shall  be 
discussed. 

It  is  further  understood  that  there  will  be  no  expropriation  or 
expulsion  of  the  inhabitants  of  the  district  included  within  the 
extension,  and  that  if  land  is  required  for  public  offices,  fortifica- 
tions, or  the  like,  official  purposes,  it  shall  be  bought  at  a  fair  price. 

If  cases  of  extradition  of  criminals  occur,  they  shall  be  dealt  with 
in  accordance  with  the  existing  treaties  between  Great  Britain  and 
China  and  the  Hongkong  Regulations. 

The  area  leased  to  Great  Britain  as  shown  on  the  annexed  map, 
includes  the  waters  of  Mirs  Bay  and  Deep  Bay,  but  it  is  agreed  that 
Chinese  vessels  of  war,  whether  neutral  or  otherwise,  shall  retain 
the  right  to  use  those  waters.^* 

Weihaiwei.  Completing  the  series  of  leases  of  territory 
by  China  came  that  of  Weihaiwei  to  Great  Britain 
effected  by  the  convention  of  July  1, 1898.^'^ 

The  reason  for  this  lease,  as  stated  in  the  convention, 

"  Taking  advantage  of  this  qualification  Great  Britain  by  an  Order-in- 
Council  of  December  27,  1899,  has  ousted  the  Chinese  from  this  jurisdic- 
tion.   Eertalet's  Treaties,  p.  749. 

"MacMurray,  No.  1898/11.  Before  this  convention  Great  Britain  had  a 
small  foreshore  at  Kowloon. 

"MacMurray,  No.  1898/14. 


LEASED  AEEAS  241 

was  **  to  provide  Great  Britain  with  a  suitable  naval 
harbor  in  North  China  and  for  the  better  protection  of 
British  commerce  in  the  neighboring  seas.'* 

The  lease,  it  is  declared,  shall  endure  **  for  so  long  a 
period  as  Port  Arthur  shall  remain  in  the  occupation  of 
Eussia/'^^ 

Within  the  area  leased  it  is  provided  that  Great  Britain 
**  shall  have  sole  jurisdiction." 

Great  Britain  shall  have,  in  addition,  the  right  to  erect  fortifi- 
cations, station  troops,  or  take  any  other  measures  necessary  for 
defensive  purposes,  at  any  points  on  or  near  the  coast  of  the  region 
east  of  the  meridian  121°  40'  east  of  Greenwich,  and  to  acquire  on 
equitable  compensation  within  that  territory  such  sites  as  may  be 
necessary  for  water  supply,  communications,  and  hospitals.  Within 
that  zone  Chinese  administration  will  not  be  interfered  with,  but 
no  troops  other  than  Chinese  or  British  shall  be  allowed  therein. 

It  is  also  agreed  that  within  the  walled  city  of  Weihaiwei,  Chinese 
officials  shall  continue  to  exercise  jurisdiction  except  so  far  as  may 
be  inconsistent  with  naval  and  military  requirements  for  the  de- 
fence of  the  territory  leased.^'^ 

It  is  further  agreed  that  Chinese  vessels  of  war,  whether  neutral 
or  otherwise,  shall  retain  the  right  to  use  the  waters  herein  leased 
to  Great  Britain. 

It  is  further  understood  that  there  will  be  no  expropriation  or 
expulsion  of  the  inhabitants  of  the  territory  herein  specified,  and 
that  if  land  is  required  for  fortifications,  pubhc  offices,  and  any 
official  or  pubhc  purpose,  it  shall  be  bought  at  a  fair  price.^* 

Before  the  lease  convention  was  signed,  on  April  19, 

"With  the  transfer  in  1906  of  Port  Arthur  to  the  Japanese  it  might 
have  been  possible  for  the  Chinese  to  raise  the  question  whether  the 
Weihaiwei  lease  was  not  ipso  facto  terminated.  No  such  question  has, 
however,  been  raised. 

"  Great  Britain  has  not  exercised  her  right  to  fortify  Weihaiwei. 

"  See  R.  F.  Johnston,  Lion  and  Dragon  in  "Northern  China,  for  an  account 
of  British  activities  and  administration  in  the  Weihaiwei  leased  territory. 

16 


242      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

1898,  Great  Britain  formally  declared  to  Germany  **  that 
in  establishing  herself  at  Weihaiwei,  she  has  no  intention 
of  injuring  or  contesting  the  rights  and  interests  of  Ger- 
many in  the  Province  of  Shantung,  or  of  creating  difficul- 
ties for  her  in  that  province.  It  is  especially  understood 
that  England  will  not  construct  any  railway  communica- 
tion from  Weihaiwei  and  the  district  leased  therewith 
into  the  interior  of  the  Province  of  Shantung.^^ 

Italy.  On  February  28, 1899,  Italy  demanded  of  China 
the  lease  of  Sanmen  Bay  on  the  coast  of  Chekiang  as  a 
coaling  station  and  naval  base,  together  with  certain 
other  rights.  China  refused  and  all  that  Italy  received 
was  a  mining  concession  in  northern  Chekiang. 

Extraterritorial  Rights  in  Leased  Territories.  With  the 
lease  of  these  territories  to  Germany,  Russia,  France, 
and  Great  Britain,  the  question  arose  whether,  the  actual 
government  and  control  of  these  territories  having  gone 
out  of  Chinese  hands  and  into  those  of  the  Western  States 
concerned,  the  nationals  of  the  other  Treaty  Powers 
might  continue  to  claim  and  exercise  within  them  rights 
of  extraterritoriality. 

As  to  this,  the  general  position  of  the  Powers,  except 
Japan,  was  that  these  rights  could  not  be  claimed,  though 
Japan  herself  changed  her  ground  when  she  supplanted 
Russia  in  possession  of  the  Liaotung  Peninsula  after  the 
Russo-Japanese  War. 

An  excellent  discussion  of  this  point  of  law  is  found  in 
a  memorandum  prepared  by  the  Solicitor  for  the  Depart- 
ment of  State  and  sent  by  Secretary  Hay  to  the  American 

"Rockhill,  p.  180;  MacMurray,  No.  1898/4  (note). 


LEASED  AREAS  243 

Minister  at  Peking.^*^    In  Ms  covering  letter  Secretary- 
Hay  said: 

The  intention  and  effect  of  China's  foreign  leases  having  appar- 
ently been  the  relinquishment  hy  China  during  the  term  of  the 
leases  and  the  conferment  upon  the  foreign  power  of  all  jurisdic- 
tion over  the  territory,  such  relinquishment  and  transfer  of  juris- 
diction would  seem  also  to  involve  the  loss  by  the  United  States  of 
its  right  to  exercise  extraterritorial  consular  jurisdiction  in  the 
territories  so  leased,  while,  as  you  remark,  as  these  territories  have 
practically  passed  into  the  control  of  peoples  whose  jurisprudence 
and  method  are  akin  to  our  own,  there  would  seem  to  be  no  sub- 
stantial reason  for  claiming  the  continuance  of  such  jurisdiction 
during  the  foreign  occupancy  or  tenure  of  the  leased  territory. 

As  a  corollary  to  this  view,  which  from  your  statement  appears 
to  be  held  by  all  the  powers,  with  the  exception  of  Japan,  the 
ordinary  consular  functions  prescribed  and  defined  in  the  inter- 
course of  the  Christian  powers  among  themselves  [i.  e.,  those  func- 
tions mot  connected  with  the  matter  of  extraterritoriality]  could 
obviously  not  be  exercised  within  the  leased  terrritory  by  a  consul 
of  the  United  States  stationed  in  neighboring  Chinese  territory 
without  some  express  recognition  of  his  official  character,  by  exe- 
quatur or  otherwise,  on  the  part  of  the  sovereign  into  whose 
control  the  territory  has  passed  by  lease  for  the  time  being.  .  .  . 
it  remains  to  be  determined  in  what  manner  the  interests  of 
American  citizens  in  such  leased  territories  are  to  be  watched  over 
and,  in  case  of  need,  protected  by  the  agencies  common  in  the  inter- 
course of  civilized  persons.  Those  interests,  often  situated  in  the 
interior,  remain  for  the  most  part  under  the  same  Chinese  sur- 
roundings as  heretofore,  the  superior  control  of  the  lessee  power 
being  manifested  through  native  agencies  and  by  way  of  influence 
rather  than  by  direct  administration.  Under  such  circumstances, 
the  United  States  cannot  be  expected  to  forego  the  use  of  all  the 
customary  agencies  of  intercourse  in  behalf  of  its  citizens  and  their 
property  and  commerce. 

*>  U.  8.  For.  Bels.,  1900,  pp.  387  flf. 


244      FOEBIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

In  the  memoranduin  inclosed  in  Secretary  Hay's  letter 
to  Minister  Conger,  the  texts  of  the  Sino- American 
treaties  granting  extraterritorial  rights  were  quoted, 
after  which,  the  Solicitor  added : 

As  it  is  expressly  stipulated  in  the  lease  that  Cliiiia  retains 
sovereignty  over  the  territory  leased,  it  could  doubtless  be  asserted 
that  such  territory  is  still  Chinese  territory  and  that  the  provisions 
of  our  treaties  with  China  granting  consular  jurisdiction  are  still 
applicable  therein.  But  in  view  of  the  express  relinquishment  of 
jurisdiction  by  China,  I  infer  that  the  reservation  of  sovereignty 
is  merely  intended  to  cut  off  possible  future  claim  of  the  lessee 
that  the  sovereignty  of  the  territory  is  permanently  vested  in  them. 
The  intention  and  effect  of  these  leases  appear  to  me  to  have  been 
the  relinquishment  by  China,  during  the  term  of  the  lease,  and  the 
conferring  upon  the  foreign  power  in  each  case  of  aU  jurisdiction 
over  the  territory.  Such  relinquishment  would  seean,  also,  to 
invdve  the  loss  by  the  United  States  of  its  right  to  exercise  con- 
sular jurisdiction  in  the  territories  leased. 


CHAPTER  IX 

The  Open  Doob  in  China  and  Gtjabantees  op  China's 

SOVEEEIGNTY,  TeBEITOBIAL  AND  AdMINIS- 

tbative  Integeity 


The  "  Open  Door  "  in  China.  It  has  already  appeared 
that,  nnder  the  operation  of  the  most  favored  nation 
clause,  which  all  the  Treaty  Powers  have  had  inserted 
at  some  time  in  their  respective  treaties  with  China,  all 
these  Powers  or  their  nationals  are  placed  upon  an 
equality  with  regard  to  snch  rights  of  trade  and  naviga- 
tion as  China  has  seen  fit  or  been  compelled  to  grant. 
And,  until  the  closing  years  of  the  nineteenth  century, 
this  principle  was  sufficient  to  keep  all  the  nations  upon 
a  substantial  equality  of  rights  and  privileges  in  their 
commercial  and  financial  dealings  with  China.  However, 
as  will  be  shown  in  the  next  chapters,  following  the  Sino- 
Japanese  War  of  1894-1895  which  revealed  the  utter  mili- 
tary weakness  of  China,  there  was  inaugurated  a  regime 
in  which  not  only  was  China  obliged  to  part  with  prac- 
tical administrative  control  over  a  number  of  leased 
areas,  but  in  which  also,  there  came  to  the  front  the.  per- 
sistent efforts  of  the  various  Treaty  Powers  to  mark  out 
for  themselves  great  portions  of  China  within  which  they 
might  claim  to  enjoy  preferential  rights  as  regards  the 
granting  by  China  of  railway  and  other  concessions. 
It  thus  seemed  that  not  only  was  the  **  Breakup  "  of 
China  imminent,  but  that,  pending  that  process,  there 
was  to  be  a  struggle  between  the  Powers  for  preferential 

245 


246      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

privileges  in  those  portions  of  China  that  might  still 
remain  under  the  administrative  control  of  the  Chinese 
authorities.  This  matter  of  the  creation  of  "  spheres  of 
interest  *'  or  of  **  influence  **  will  be  more  specifically 
considered  in  the  next  chapter :  it  is  here  referred  to  only 
as  explaining  the  reason  why,  with  America  taking  the 
lead,  there  should  have  been  developed  the  doctrine  of 
the  Open  Door — a  doctrine  that  denied  to  the  Powers  the 
right  to  claim  within  their  special  spheres  of  interest 
preferential  rights  in  matters  of  trade  and  commerce. 

Secretary  Hay's  Circular  Letter.  The  movement  to 
secure  the  formal  acceptance  by  the  Powers  of  the  prin- 
ciple that  they  would  not  claim  for  their  own  nationals 
within  their  respective  spheres  or  leased  areas  preferen- 
tial treatment  as  regards  customs  duties,  harbor  dues, 
transportation  charges,  etc.,  was  initiated  by  the  Ameri- 
can Secretary  of  State,  John  Hay,  in  the  fall  of  1899.  He 
caused  to  be  submitted  to  the  Chancelleries  of  Germany, 
Eussia,  France,  Japan,  Great  Britain  and  Italy,  for  their 
approval,  the  following  formulation  of  a  general  policy 
to  be  pursued  in  China.^ 

The  President  [of  the  United  States]  .  .  .  understands  it  to  be 
the  settled  pohcy  and  purpose  of  Great  Britain  not  to  use  any 
privileges  which  may  be  granted  to  it  in  China  as  a  means  of 
excluding  any  commercial  rivals,  and  that  freedom  of  trade  for 
it  in  that  Empire  means  freedom  of  trade  for  aU  the  world  alike. 
Her  [Britannic]  Majesty^s  Government,  while  conceding  by  formal 
agreements  with  Grermany  and  Eussia  the  possession  of  "  spheres  of 

*  The  communications  to  these  coimtries  with  slight  changes  to  meet 
special  conditions,  were  in  the  same  words.  The  clauses  above  quoted  are 
from  the  commuuication  to  the  British  Foreign  OflBce.  For  texts  of  com- 
munications and  replies,  see  MacMurray,  No.  1900/2. 


THE  OPEN  DOOR  247 

influence  or  interest "  in  China,  in  which  they  are  to  enjoy  special 
rights  and  privileges,  particularly  in  respect  to  railroads  and  min- 
ing enterprises,  has  at  the  same  time  sought  to  maintain  what  is 
commonly  called  the  "open  door"  policy,  to  secure  to  the  com- 
merce and  navigation  of  all  nations  equality  of  treatment  within 
such  "  spheres."  The  maintenance  of  this  policy  is  alike  urgently 
demanded  by  the  commercial  communities  of  our  two  nations,  as 
it  is  justly  held  by  them  to  be  the  only  one  w'hich  will  improve 
existing  conditions,  enahle  them  to  maintain  their  positions  in  the 
markets  of  Ohiaa,  and  extend  their  future  operations. 

While  the  Government  of  the  United  States  will  in  no  way 
commit  itself  to  any  recognition  of  the  exclusive  rights  of  any 
power  within  or  control  over  any  portion  of  the  Chinese  Empire, 
under  such  agreements  as  have  been  recently  made,  it  cannot  con- 
ceal its  apprehensions  that  there  is  danger  of  com/plications  arising 
between  the  treaty  powers  which  may  imperil  the  rights  insured  to 
the  United  States  by  its  treaties  with  China. 

It  is  the  sincere  desire  of  my  government  that  the  interests  of 
its  citizens  may  not  be  prejudiced  through  exclusive  treatment  by 
any  of  the  controlling  powers  within  their  respective  "spheres  of 
interest"  in  China,  and  it  hopes  to  retain  there  an  open  market 
for  all  the  world's  commerce,  remove  dangerous  sources  of  inter- 
national irritation,  and  thereby  hasten  united  action  of  the  powers 
at  Peking  to  promote  administrative  reforms  so  greatly  needed  for 
strengthening  the  Imperial  Government  and  maintaining  the  integ- 
rity of  China,  in  which  it  believes  the  whole  western  world  is  alike 
concerned.  It  believes  that  such  a  result  may  be  greatly  aided 
and  advanced  by  declarations  by  the  various  Powers  claiming 
"  spheres  of  interest "  in  China  as  to  their  intentions  in  regard  to 
the  treatment  of  foredgn  trade  and  commerce  therein,  and  that  the 
present  is  a  very  favorahle  moment  for  informing  Her  Majesty's 
G-ovemment  of  the  desire  of  the  United  States  to  have  it  make  on 
its  own  part  and  to  lend  its  powerful  support  in  the  effort  to 
ofbtain  from  each  of  the  various  Powers  claiming  "spheres  of 
interest"  in  China  a  declaration  substantially  to  the  following 
effect : 

(1)  That  it  wiU  in  no  wise  interfere  with  any  treaty  port  or 


248      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

any  vested  interest  within  any  so-called  "sphere  of  interest"  or 
leased  territory  it  may  have  in  China. 

(2)  That  the  Chinese  treaty  tariff  of  the  time  being  shaU  apply 
to  all  merchandise  landed  or  shipped  to  all  such  pori»  as  are  within 
such  "spheres  of  interest"  (unless  they  be  "free  ports"),  no 
matter  to  what  nationality  it  may  belong,  and  tlmt  duties  so  levi- 
able shall  be  collected  by  the  Chinese  Government. 

(3)  That  it  wiU  levy  no  higher  harbor  dues  on  vessels  of  another 
nationaliiy  frequenting  any  port  in  sudh  "sphere"  than  shaU  be 
levied  on  vessels  of  its  own  nationalily,  and  no  higher  railroad 
charges  over  lines  built,  controlled,  or  operated  within  its  "  sphere  " 
on  merchandise  belonging  to  citizens  or  subjects  of  other  nation- 
alities transported  through  such  "  sphere  "  than  shall  be  levied  on 
similar  merchandise  belonging  to  its  own  nationals  transported 
over  equal  distances. 

Responses  of  Powers  to  Secretary  Hay*s  Letter.     The 

replies  of  the  Powers  to  this  communication  of  the 
American  Secretary  were  substantially  as  follows: 

Great  Britain  replied  on  September  29,  1899,  that  its 
Policy  in  China,  consistently  advocated,  had  been  "  one 
of  securing  equal  opportunity  for  the  subjects  and  citi- 
zens of  all  nations  in  regard  to  commercial  enterprise  in 
China,  that  from  this  policy  Her  Majesty's  Government 
had  no  intention  or  desire  to  depart."  And,  again,  on 
November  30,  that  **  Her  Majesty's  Government  wiQ  be 
prepared  to  make  a  declaration  in  the  sense  desired  by 
your  [the  American]  Government  in  regard  to  the  leased 
territory  of  Weihaiwei  and  all  territory  in  China  which 
may  hereafter  be  acquired  by  Great  Britain  by  lease  or 
otherwise,  and  all  spheres  of  interest  now  held  or  that 
may  hereafter  be  held  by  her  in  China,  provided  that  a 
similar  declaration  is  made  by  other  Powers  concerned." 

Germany  replied,  on  February  17,  1900: 


THE  OPEN  DOOR  249 

The  Impemal  Government  has,  from  the  beginning,  not  only 
asserted,  but  also  practically  carried  out  to  the  fullest  extent,  in 
its  Chinese  possessions  absolute  equality  of  treatment  of  all  nations 
with  regard  to  trade,  navigation,  and  commerce.  The  Imperial 
Government  entertain  no  thought  of  departing  in  the  future  from 
this  principle,  which  at  once  excludes  any  prejudicial  or  disad- 
vantageous commercial  treatment  of  the  citizens  of  the  United 
States,  so  long  as  it  is  not  forced  to  do  so,  on  account  of  consid- 
erations of  reciprocity,  by  a  divergence  from  it  by  other  govern- 
ments. 

Italy  replied,  Jannary  7,  1900:  "  The  Government  of 
the  King  adheres  willingly  to  the  proposals  set  forth  in 
the  said  [American]  note  of  December  9.** 

Japan,  December  26, 1899,  replied  that  **  The  Imperial 
Government  will  have  no  hesitation  to  give  their  consent 
to  so  fair  and  just  a  proposal  of  the  United  States,  pro- 
vided that  all  the  other  Powers  shall  accept  the  same." 

France,  on  December  16,  declared  that  the  Republic 
"  desires  throughout  the  whole  of  China  and,  with  the 
natural  reservation,  that  all  the  Powers  interested  give 
an  assurance  of  their  willingness  to  act  likewise,  is  ready 
to  apply  in  the  territories  which  are  leased  to  it,  equal 
treatment  to  the  citizens  and  subjects  of  all  nations, 
especially  in  the  matter  of  customs  duties  and  navigation 
dues,  as  well  as  transportation  tariffs  on  railways." 

All  of  these  replies  substantially  accepted  Secretary 
Hay's  proposal.  The  reply  of  Eussia,  December  18-30, 
was  not  quite  so  satisfactory.  That  Government  declared : 

Insofar  as  the  territory  leased  by  China  to  Eussia  is  concerned, 
the  Imperial  Government  has  already  demonstrated  its  firm  inten- 
tion to  follow  the  policy  of  the  "open  door"  by  creating  Dahiy 
(Ta-lien-wan)  a  free  port;  and  if  at  some  future  time  that  port, 
although  remaining  free  itself,  should  be  separated  by  a  customs 


250      FOKEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

limit  from  other  portions  of  the  territory  in  question,  the  customs 
duties  would  ibe  levied,  in  the  zone  suibject  to  the  tariff,  upon  all 
foreign  merchandise  without  distinction  as  to  nationality.  As  to 
ports  now  opened  or  hereafter  to  be  opened  to  foreign  commerce 
by  the  Chinese  Government,  and  which  lie  beyond  the  territory 
leased  to  Russia,  the  settlement  of  the  question  of  customis  duties 
belongs  to  China  herself,  and  the  Imperial  Government  has  no 
intention  w'hatever  of  claiming  any  privileges  for  its  own  subjects 
to  the  exclusion  of  foreigners.  It  is  to  be  understood,  however, 
that  this  assurance  of  the  Imperial  Government  is  given  upon 
condition  that  a  similar  declaration  shall  be  made  by  other  Powers 
having  interests  in  China. 

In  this  reply  of  Russia  it  will  be  observed  that  only  the 
question  of  customs  is  specifically  covered,  no  mention 
being  made  of  harbor  dues  and  railway  charges.  How- 
ever, in  closing,  the  Russian  note  expresses  the  conviction 
that  the  reply  is  *'  such  as  to  satisfy  the  inquiry  made 
in  the  aforementioned  [American]  note,*'  and  that  "  the 
Imperial  Government  is  happy  to  have  complied  with  the 
wishes  of  the  American  Government. ' ' 

In  view  of  the  replies  thus  received,  and  in  order  to 
make  the  commitments,  if  possible,  more  definite.  Secre- 
tary Hay  on  March  20, 1900,  addressed  the  following  note 
to  the  American  Ambassadors  accredited  to  the  Powers 
concerned : 

Sir:  The Government  having  accepted  the  declar- 
ation suggested  by  the  United  States  concerning  foreign  trade  in 
China,  the  terms  of  which  I  transmitted  to  you  in  my  instruction 

No.  —  of and  like  action  having  been  taken  by  all  the 

various  powers  having  leased  territory  or  so-called  "  spheres  of 
interest"  in  the  Chinese  Empire,  as  shown  by  the  notes  which  I 
herewith  transmit  to  you,  you  will  please  inform  the  Government 
to  which  you  are  accredited  that  the  condition  originally  attacihed 
to  its  acceptance — ^that  all  other  Powers  concerned  should  likewise 


THE  OPEN  DOOR  251 

accept  the  proposals  of  the  United  States — ^having  been  con^lied 
■with,  this  Government  will  therefore  consider  the  assent  given  to 
it  by as  final  and  conclusive. 

You  will  also  transmit  to  the  Minister  of  Foreign  Affairs  copies 
of  the  present  enclosures,  and  by  the  same  occasion  convey  to  him 
the  expression  of  the  sincere  gratification  which  the  President  feels 
at  the  successful  termination  of  these  negotiations,  in  which  he  sees 
proof  of  the  friendly  spirit  which  animates  the  various  powers 
interested  in  the  untrammeled  development  of  commerce  and  indus- 
try in  the  Chinese  Empire,  and  a  source  of  vast  benefit  to  the  whole 
commercial  world. 

I  am,  etc.,  John  Hay. 

Repeated  Affirmations  of  the  Open  Door  Policy.    During 

the  Boxer  troubles,  on  July  3,  1900,  Mr.  Hay  sent  to  all 
the  Powers  having  treaty  relations  with  China  the  follow- 
ing circular  telegram: 

In  this  critical  posture  of  affairs  in  China  it  is  deemed  appro- 
priate to  define  the  attitude  of  the  United  States  as  far  as  the 
present  circumstances  permit  this  to  be  done.  We  adhere  to  the 
policy  initiated  by  us  in  1857,  of  peace  with  the  Chinese  nation,  of 
furtherance  of  lawful  commerce,  and  of  protection  of  lives  and 
property  of  our  citizens  by  all  means  guaranteed  under  extraterri- 
torial treaty  rights  and  by  the  law  of  nations.  .  .  .  The  policy  of 
the  Government  of  the  United  States  is  to  seek  a  solution  [of  the 
existing  troubles]  which  may  bring  about  permanent  safety  and 
peace  to  China,  preserve  Chinese  territorial  and  administrative 
entity,  protect  all  rights  guaranteed  to  friendly  powers  by  treaty 
and  international  law,  and  safeguard  for  the  world  the  principle  of 
equal  and  impartial  trade  with  all  parts  of  the  Chinese  Empire.^ 

In  the  English-Crerman  treaty  of  October  16,  1900,  the 
purpose  of  which  was  to  define  the  mutual  policy  of  the 
two  nations  in  China,  it  was  declared  that  the  following 
principles  would  be  observed : 

'  U.  8.  For.  Rels.,  1900,  p.  299. 


252      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

(1)  It  is  matter  of  joint  and  permanent  international  interest 
that  the  ports  on  the  rivers  and  littoral  of  China  should  remain  free 
and  open  to  trade  and  to  every  other  legitimate  form  of  economic 
activity  for  the  nationals  of  all  countries  without  distinction;  and 
that  the  governments  agree  on  their  part  to  uphold  the  same  for  all 
Chinese  territory  as  far  as  they  can  exercise  influence. 

(2)  Her  Britannic  Majesty's  Government  and  the  Imperial 
German  Government  will  not,  on  their  part,  make  use  of  the  pres- 
ent [Boxer]  complication  to  obtain  for  themselves  any  territorial 
advantages  in  Chinese  dominions,  and  will  direct  their  policy 
towards  maintaining  undiminished  the  territorial  condition  of  the 
Chinese  Empire.' 

Here,  it  will  be  observed,  is  not  only  an  undertaking 
mutually  to  abide  by  the  open  door  policy,  but,  so  far  as 
possible,  to  maintain  the  territorial  integrity  of  the 
Chinese  Empire.  It  was  further  provided  that  the  agree- 
ment should  be  communicated  to  the  other  Powers  with 
the  invitation  to  them  to  accept  the  principles  recorded 
in  it. 

Secretary  Hay,  acknowledging  the  receipt  of  the  text 
of  this  agreement,  sent  to  the  German  and  British  repre- 
sentatives a  note  in  which  he  said :  * 

When  the  recent  [Boxer]  troubles  were  at  their  height  this  Gov- 
ernment, on  the  3d  of  July,  once  more  made  an  announcement  of 
its  policy  regarding  impartial  trade  and  the  integrity  of  the  Chinese 
Empire  and  had  the  gratification  of  learning  that  all  the  Powers 
held  similar  views.  And  since  that  time  the  most  gratifying  har- 
mony has  existed  among  all  the  nations  concerned  as  to  the  ends 
to  be  pursued,  and  there  has  been  little  divergence  of  opinion  as 
to  the  details  of  the  course  to  be  pursued." 

» MacMurray,  No.  1900/5. 
*  U.  8.  For.  Rels.,  1900,  p.  355. 

•Continuing,  Secretary  Hay  expressed  the  full  sympathy  of  his  Govern- 
ment with  the  principles  set  forth  in  the  two  sections  of  the  German- 


THE  OPEN  DOOE  253 

In  1901,  as  will  later  be  referred  to  in  connection  with 
the  development  of  Eussian  influence  in  Manchuria,  the 
Japanese  Minister  to  the  United  States  informed  the 
American  Government  that  a  then  pending  convention 
between  China  and  Russia  which  would  grant  to  the 
latter  certain  special  mining  privileges  in  Manchuria  was 
deemed  by  the  Japanese  Government  a  violation  of  the 
understanding  between  the  Treaty  Powers  with  regard 
to  the  maintenance  of  the  integrity  of  the  Chinese 
Empire ;  and,  with  reference  to  the  same  proposed  agree- 
ment the  United  States  in  a  circular  letter  to  the  other 
Powers  declared  that  it  would  view  with  concern  any 
agreement  by  which  China  might  cede  to  any  corporation 
or  company  the  exclusive  right  and  privilege  of  opening 
mines,  establishing  railroads  or  in  any  other  way  indus- 
trially developing  Manchuria — that  such  an  agreement 
would  constitute  a  distinct  breach  of  the  treaties  between 
China  and  the  Powers. 

Affirmations  of  the  Open  Door  Principle  by  Treaties 
Among  the  Foreign  Powers.  In  treaties  entered  into  by 
the  Treaty  Powers  between  one  another,  acceptance  of 
the  principle  of  the  Open  Door  has  been  repeatedly 
affirmed. 

English  treaty  which  have  been  quoted.  This  agreement  also  contained 
the  following  section  concerning  which  Secretary  Hay  said  that  the  Gov- 
ernment of  the  United  States  did  not  regard  itself  as  called  upon  to 
express  an  opinion,  as  being  merely  a  reciprocal  arrangement  between  the 
two  contracting  Powers: 

"  3.  In  case  of  another  Power  making  use  of  the  complications  in  China 
in  order  to  obtain  imder  any  form  whatever  such  territorial  advantages, 
the  two  contracting  parties  reserve  to  themselves  to  come  to  a  preliminary 
imderstanding  as  to  the  eventual  steps  to  be  taken  for  the  protection  of 
their  own  interests  in  China." 


254      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  the  Anglo-Japanese  treaty  of  January  30,  1902,®  it 
was  declared  in  the  preamble  that  the  two  Powers  *  *  actu- 
ated solely  by  a  desire  to  maintain  the  status  quo  and 
general  peace  in  the  extreme  East,  being  moreover 
specially  interested  in  maintaining  the  independence  and 
territorial  integrity  of  China  and  the  Empire  of  Korea, 
and  in  securing  equal  opportunities  in  those  countries 
for  the  conmaerce  and  industry  of  all  nations,  hereby 
agree,  etc." 

In  a  joint  declaration  of  March  3  (16),  1902,  by  France 
and  Eussia,  in  reply  to  the  communication  acquainting 
them  with  the  Alliance,  it  was  declared  that  the 
Anglo-Japanese  treaty  of  January  30,  1902,  having  been 
received,  the  governments  of  France  and  Russia  were 
**  fully  satisfied  to  find  therein  affirmed  the  fundamental 
principles  which  they  have  themselves,  on  several  occa- 
sions, declared  to  form  the  basis  of  their  policy  and  which 
still  remain  so. ' ' 

However,  the  Convention  continues: 

The  two  governments  consider  that  the  observance  of  these  prin- 
ciples is  ai  the  same  time  a  guarantee  of  their  special  interests  in 
the  Far  East.  Nevertheless,  being  oibliged  themselves  also  to  take 
into  consideration  the  case  in  which  either  the  aggressive  action  of 
third  Powers,  ot  the  recurrence  of  disturbances  in  China,  jeopard- 
ising the  integrity  and  free  development  of  that  Power,  might 
become  a  menace  to  their  own  interests,  the  two  allied  Governments 
reserve  to  themselves  the  right  to  consult  in  that  contingency  as 
to  the  means  to  be  adopted  for  securing  those  interests.' 

In  the  Anglo-Japanese  agreement  of  August  12,  1905, 
replacing  that  of  January  30, 1902,  it  was  declared  in  the 

•  MacMurray,  No.  1902/2. 
^MacMurray,  No.  1902/2  (note). 


THE  OPEN  DOOR  255 

preamble  that  the  object  of  the  agreement  included  "  the 
preservation  of  the  common  interests  of  all  Powers  in 
China  by  insuring  the  independence  and  integrity  of  the 
Chinese  Empire  and  the  principle  of  equal  opportunities 
for  the  commerce  and  industry  of  all  nations  in  China. ' '  * 

Conununicating  this  agreement  to  the  Russian  Govern- 
ment, September  6, 1905,  the  Marquis  of  Lansdowne  said : 
**  His  [Britannic]  Majesty's  Government  believe  that 
they  may  count  upon  the  good  will  and  support  of  all  the 
Powers  in  endeavoring  to  maintain  peace  in  Eastern 
Asia  and  in  seeking  to  uphold  the  integrity  and  inde- 
pendence of  the  Chinese  Empire  and  the  principle  of 
equal  opportunity  for  the  commerce  and  industry  of  all 
nations  in  that  country." 

During  the  Russo-Japanese  War  the  American  Govern- 
ment became  apprehensive  that,  at  the  conclusion  of  the 
war,  concessions  of  Chinese  territory  might  be  made  to 
neutral  powers.  It  therefore  sought  to  obtain  assur- 
ances from  these  Powers  that  such  concessions  either  of 
territory  or  of  special  privileges  in  conflict  with  the  open 
door  principle  would  not  be  sought.  From  the  neutral 
Powers  thus  addressed  the  following  replies  were 
received : 

The  Austro-Hungarian  Minister  of  Foreign  Affairs 
said :  *  *  It  gives  gratification  to  the  undersigned  to  state 
that  the  Imperial  and  Royal  Government,  in  conformity 
with  the  views  of  the  Government  of  the  United  States  of 
America,  has  always  had  in  mind  both  of  these  objects, 
the  perpetuation  of  the  integrity  of  China  and  policy  of 
the  open  door  in  the  Far  East,  and  intends  to  observe  this 
attitude  also  in  future." 

'Id.,  No.  1905/C. 


256      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

The  Belgian  Government  declared  that  **  within  the 
limits  of  its  interest  in  Chinese  affairs  it  is  fully  in  accord 
with  the  views  thus  expressed  [by  the  United  States]." 

The  German  Chancellor  declared  that  the  American 
view  '*  corresponds  entirely  with  that  of  the  German 
Government.  .  .  .  The  Imperial  Government  does  not 
seek  for  itself  any  further  acquisition  of  territory  in 
China." 

Lord  Lansdowne,  in  behalf  of  Great  Britain,  asserted 
**  full  concurrence  "  with  the  desires  of  America  to  main- 
tain the  open  door  and  the  integrity  of  China;  and  an 
equally  reassuring  statement  was  obtained  from  the 
Portuguese  Minister  of  Foreign  Affairs. 

In  the  Portsmouth  Treaty  of  Peace  of  September  5, 
1905,  between  Russia  and  Japan,  the  two  Powers  declared, 
with  respect  to  Manchuria,  that  they  had  no  * '  territorial 
advantages  or  preferential  or  exclusive  concessions  in 
impairment  of  Chinese  sovereignty  or  inconsistent  with 
the  principle  of  equal  opportunity."  And  both  Powers 
reciprocally  engaged  **  not  to  obstruct  any  general  meas- 
ures common  to  all  countries,  which  China  may  take  for 
the  development  of  the  commerce  and  industry  of  Man- 
churia."® 

In  the  convention  between  the  same  two  Powers  of 
July  30, 1907,  it  was  declared : 

Aeticle  I.  Each  of  the  High  Oontracting  Parties  engages  to 
respect  the  actual  territorial  integrity  of  the  other,  and  all  rights 
accruing  to  one  and  the  other  party  from  treaties,  conventions  and 
contracts  in  force  between  them  and  China,  copies  of  which  have 
been  exchanged  between  the  contracting  parties^**   (in  so  far  as 

•MacMurray,  No,  1905/8. 

*•  But  not  in  all  cases  made  known  to  the  other  Powers.    See  p.  322. 


THE  OPEN  DOOR  257 

these  rights  are  not  incompatilble  with  the  principles  of  equal  op- 
portunity) of  the  Treaty  signed  at  Portmouth  on  the  5th  of 
September  (23rd  of  August),  1905,  as  well  as  the  special  con- 
ventions concluded  between  Japan  and  Russia. 

Aeticle  II.  The  two  High  Contracting  Pari;ies  recognize  the 
independence  and  territorial  integrity  of  the  Empire  of  China  and 
the  principle  of  equal  opportunity,  in  whatever  concerns  the  com- 
merce and  industry  of  all  nations  in  that  Emipire,  and  engage  to 
sustain  and  defend  the  maintenance  of  the  status  quo  and  respect 
for  this  principle  by  all  the  pacific  means  within  their  reach.^^ 

In  the  Franco- Japanese  '*  arrangement"  of  June  10, 
1907,  it  was  declared : 

The  Governments  of  Japan  and  France,  being  agreed  to  respect 
the  independence  and  integrity  of  China,  as  well  as  the  principle 
of  equal  treatment  in  that  country  for  the  commerce  and  subjects 
or  citizens  of  all  nations,  and  having  a  special  interest  to  have  the 
order  and  pacific  state  of  things  preserved  especially  in  the  regions 
of  the  Chinese  Empire  adjacent  to  the  territories  where  they  have 
rights  of  sovereignty,  protection  or  occupation,  engage  to  support 
each  other  for  assuring  the  peace  and  security  in  those  regions, 
with  a  view  to  mainta,in  the  respective  situation  and  territorial 
rights  of  the  two  High  Contrsicting  Parties  in  the  Continent  of 
Asia.^^ 

In  the  Eoot-Takahira  agreement  of  1908,  embodied  in 
an  interchange  of  notes  between  the  American  Secretary 
of  State  and  the  Japanese  Ambassador  at  Washington, 
it  was  declared : 

It  is  the  wish  of  the  two  Governments  to  encourage  the  free  and 
peaceful  development  of  their  commerce  on  the  Pacific  Ocean. 

2.  The  policy  of  both  Governments,  iminfluenced  by  any  ag- 
gressive tendencies,  is  directed  to  the  maintenance  of  the  existing 
status  quo  in  the  region  above  mentioned,  and  to  the  defence  of 

"MacMurray,  No.  1907/11.  "Zrf.,  No.  1907/7. 

17 


258      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

the  principle  of  equal  opiportuiiity  for  connmerce  and  industry  in 
China. 

3.  They  are  accordingly  firmly  resolved  reciprocally  to  respect 
the  territorial  possessions  belonging  to  each  other  in  said  region. 

4.  They  are  also  determined  to  preserve  the  common  interest 
of  all  powers  in  China  by  suppori;ing  by  all  pacific  means  at  their 
disposal  the  independence  and  integrity  of  China  and  the  principle 
of  equal  oppori;unity  for  commerce  and  industry  of  all  nations  in 
that  Empire. 

5.  Should  any  event  occur  threatening  the  stattis  quo  as  above 
described  or  the  principle  of  equal  opporininity  as  above  defined, 
it  remains  for  the  two  Governments  to  communicate  with  each 
other  in  order  to  arrive  at  an  understanding  as  to  what  measures 
they  may  consider  useful  to  take.^^ 

In  the  Russo-Japanese  Convention  of  July  4,  1910,  the 
contracting  parties  agreed  to  *  *  maintain  and  respect  the 
status  quo  in  Manchuria  resulting  from  the  treaties,  con- 
ventions and  other  arrangements  concluded  up  to  this 
day,  between  Japan  and  Russia  or  between  either  of 
those  two  Powers  in  China."  ^* 

The  terms  of  the  Anglo-Japanese  Alliance  were  again 
modified  by  the  treaty  of  July  13,  1911.  In  this  instru- 
ment the  purposes  of  the  alliance  are  stated  in  the  pre- 
amble as  follows: 

A.  The  consoHdation  and  maintenance  of  the  general  peace  in 
the  regions  of  Eastern  Asia  and  India. 

B.  The  preservation  of  the  common  interests  of  all  the  Powers 
>  in  China  by  insuring  the  independence  and  integrity  of  the  Chinese 

Empire  and  the  principle  of  equal  opportunities  for  the  commerce 
and  industry  of  all  nations  in  China. 

C.  The  maintenance  of  the  territorial  rights  of  the  High  Con- 
tracting Parties  in  the  regions  of  Eastern  Asia  and  of  India  and 
the  defense  of  their  special  interests  in  those  regions.^" 

»  MacMurray,  No.  1908/19.  "  Id.,  No.   1910/1. 

"Id.,  No.  1911/7. 


THE  OPEN  DOOE  259 

In  the  Eusso- Japanese  Convention  of  1916  no  reference 
was  made  to  the  sovereignty  and  territorial  integrity  of 
China  nor  to  the  open  door,  the  emphasis  being  laid  on 
the  **  special  interests'*  of  the  contracting  Powers. 
After  providing  that  neither  party  would  become  a  party 
to  any  arrangement  or  political  combination  against  the 
other,  the  convention,  in  its  second  article,  declared: 

In  case  the  territorial  or  special  interests  in  the  Far  East  of  one 
of  the  Contracting  Parties  recognized  by  the  other  Contracting 
Party  are  menaced,  Japan  and  Eussia  will  act,  in  concert,  on  the 
measures  to  be  taken  in  view  of  the  support  or  co-operation  neces- 
sary for  the  protection  and  defence  of  these  rights  and  interests.'^' 

Finally,  in  1917,  we  have  the  understanding  between 
America  and  Japan  embodied  in  an  interchange  of  notes 
between  Secretary  of  State  Lansing  and  the  Japanese 
Ambassador,  Viscount  Ishii,^'^  in  which  these  representa- 
tives again  pledged  their  governments  *  *  that  they  always 
adhere  to  the  principle  of  the  so-called  Open  Door  or 
equal  opportunity  for  commerce  and  industry  in  China," 
and  that  they  have  no  purpose  * '  to  infringe  in  any  way 
the  independence  or  territorial  integrity  of  China. '  * 

Open  Door  and  Special  Interests.  In  the  chapters 
which  follow  it  will  be  found  that  affirmance  of  the  Open 
Door  principle  has  not  been  deemed  inconsistent  with  the 
establishment  of  spheres  of  interest — indeed  it  was  the 
existence  of  these  spheres  which  led  Secretary  Hay  to 
urge  upon  the  Powers  the  adoption  of  the  principle — ^nor 
has  it  prevented  the  creation  of  what  have  been  officially 
termed  "  special  interests."  Upon  their  face  it  would 
appear  that  these  are  contradictory  ideas,  and  in  fact, 

»  MacMurray,  No.  1916/9.  "  MacMurray,  No.  1917/12. 


260      POEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

they  have,  in  practice,  proved  to  be  such.  The  effort  has, 
however,  been  made  to  harmonize  them,  and  this  has  been 
only  moderately  snccessful  when  the  Open  Door  prin- 
ciple has  been  held  to  relate  only  to  matters  of  commerce 
and  navigation.  As  thus  defined  it  has  nothing  to  do  with 
non-alienation  agreements  with  respect  to  particular 
areas,  with  the  making  of  loans  to  China,  or  the  obtain- 
ing of  concessions  for  mining  or  for  the  building  of  rail- 
ways or  the  construction  and  operation  of  other  public 
works.  Nor  does  it  stand  in  the  way  of  agreements  with 
China  that  the  material  for  these  works  shall  be  imported 
from  particular  countries.  So  far  as  the  present  writer 
is  aware  no  official  and  authoritative  definition  of  the 
term  Open  Door  has  been  attempted  beyond  that  con- 
tained in  the  Hay  correspondence  of  1899.  Perhaps  as 
satisfactory  as  any  is  the  unofficial  definition  of  Over- 
lach.  He  says :  *  *  The  '  open  door  '  principle  recognizes 
the  *  vested  rights  *  and  '  special  interests  '  within  such 
spheres  as  long  as  a  certain  amount  of  opportunity  for 
others  is  preserved,  that  is,  as  long  as  the  Chinese  treaty 
tariff  is  indiscriminately  applied,  as  long  as  treaty  ports 
are  kept  open  and  as  long  as  no  harbor  dues  or  railroad 
charges  are  levied  higher  than  those  imposed  upon  sub- 
jects of  the  country  in  whose  favor  the  '  sphere  '  exists. 
The  principle  is  also  more  or  less  opposed  to  the  acquisi- 
tion of  a  monopoly  in  the  supply  of  railway  materials 
and  rolling  stock.  "^^ 

The  nature  of  the  **  special  interests  "  of  Japan  in 
China,  as  recognized  by  the  United  States  in  the  Lansing- 
Ishii  agreement,  will  be  discussed  in  Chapter  XVI. 

^Foreign  Financial  Control  in  China,  p.  vii. 


THE  OPEN  DOOR  261 

Guarantees  of  China's  Sovereignty  and  Territorial 
Integrity.  From  the  quotations  from  diplomatic  docu- 
ments which  have  been  made,  it  will  have  been  seen  that, 
coupled  with  the  numerous  affirmances  by  the  Treaty 
•Powers  of  their  intention  to  abide  by  the  principle  of  the 
open  door  in  their  dealings  with  China,  have  also  gone 
repeated  assurances  of  a  purpose  to  respect  the  sover- 
eignty and  territorial  integrity  of  China. 

A  promise  to  respect  the  sovereignty  of  a  country  does 
not  necessarily  commit  a  government  to  a  policy  broader 
than  that  of  taking  no  action  which  will  operate  against 
the  continued  existence  of  the  country  in  question  as  a 
sovereign  and  independent  State.  The  promise  to  respect 
its  territorial  integrity  goes  further  and  involves  the 
undertaking  not  to  take  or  permit  steps  to  be  taken  that 
may  lead  to  the  annexation  of  a  portion  of  the  territory 
of  the  State  for  whose  benefit  the  promise  is  made.  These 
two  promises  with  regard  to  sovereignty  and  territorial 
integrity  were  not  specifically  mentioned  in  aU  of  the 
original  letters  of  Secretary  Hay  to  the  other  Treaty 
Powers.^®  They  were  involved  in  the  undertakings  to 
which  he  sought  to  commit  the  Powers  only  in  the  sense 
that  if  China  should  cease  to  be  a  sovereign  State  there 
would  of  course  be  no  real  opportunity  for  the  operation 

^*It  was  referred  to  in  the  letter  sent  to  the  American  Ambassador  at 
London  to  be  submitted  to  the  British  Government.  The  following  was 
the  language :  "  This  Government  is  animated  by  a  sincere  desire  that  the 
interests  of  our  citizens  may  not  be  prejudiced  through  exclusive  treat- 
ment by  any  of  the  controlling  Powers  within  their  so-called  '  spheres  of 
interest '  in  China,  and  hopes  also  to  retain  there  an  open  market  for  the 
commerce  of  the  world,  remove  dangerous  sources  of  international  irrita- 
tion, and  hasten  thereby  united  and  concerted  action  of  the  Powers  at 
Peking  in  favor  of  the  administrative  reforms  so  urgently  needed  for 
strengthening  the  Imperial  Government  and  maintaining  the  integrity  of 
China  in  which  the  whole  western  world  is  alike  concerned." 


262      FOREIGN"  RIGHTS  AND  INTERESTS  IN  CHINA 

of  the  open  door  principle ;  or  that,  if  a  lease  or  sphere 
of  interest  ripened  into  actual  political  ownership  by  the 
State  holding  the  lease  or  claiming  the  sphere,  there 
would  not  be,  as  to  the  particular  areas  concerned,  the 
basis  of  a  claim  upon  the  part  of  the  other  Powers  that 
those  nations  should  enjoy  equally  good  treatment  with 
the  nationals  of  the  State  holding  the  lease  or  sphere  as 
regards  commercial  and  industrial  rights. 

It  is,  therefore,  correct  to  say  that  the  Treaty  Powers 
have  pledged  themselves  to  a  policy  with  regard  to  China 
that  goes  beyond  that  which  Secretary  Hay  in  his  original 
proposal  asked  them  to  announce.  So  far  as  formal 
official  pledges  upon  the  part  of  the  Powers  is  concerned, 
China's  sovereignty  and  territorial  integrity  thus  stand 
upon  a  peculiarly  strong  basis.  From  this  point  of  view 
she  will  be  able  to  present  to  the  League  of  Nations  a 
very  strong  case  in  the  event  that  attacks  from  outside 
are  made  upon  her  continued  sovereignty  or  upon  her 
territorial  integrity. 

Significance  to  China  of  These  Guarantees.  But  this 
important  qualification  with  regard  to  China's  continued 
independence  needs  to  be  noted.  Even  assuming  the  utmost 
good  faith  upon  the  part  of  the  Treaty  Powers,  China 
cannot  rely  upon  either  her  rights  as  a  sovereign  nation 
or  upon  the  assurances  of  the  other  Powers  to  protect  her 
against  foreign  control  if  her  own  public  services  become 
so  demoralized  as  to  furnish  inadequate  protection  to  the 
lives  and  property  of  foreigners  in  China  or  to  the  rights 
of  persons  trading  with  her  merchants.  International  law 
recognizes,  under  certain  circumstances,  the  right  of  one 
or  of  a  number  of  States  jointly  to  intervene  in  the 


THE  OPEN  DOOR  363 

domestic  affairs  of  another  sovereign  State,  and  the  guar- 
antees which  the  Powers  have  made  cannot  be  counted 
upon  to  exempt  her  from  the  operation  of  this  right  of 
intervention  if  she  presents  those  conditions  within  her 
own  borders  which,  according  to  accepted  principles  of 
international  law,  justify  foreign  intervention.  This* 
would  be  true,  if  for  no  other  reason,  from  the  fact  that 
the  promises  to  respect  her  sovereignty  and  territorial 
integrity  have,  in  every  case,  been  made  by  the  Treaty 
Powers  inter  se  and  not  with  China  herself.  She,  there- 
fore, technically  speaking,  cannot  be  said  to  have  gained 
any  contractual  or  conventional  rights  from  or  under 
them.  The  advantage  which  she  derives  from  them  is 
incidental  in  character,  namely,  that,  if  attacks  upon  her 
sovereignty  or  territorial  integrity  do  come,  there  must 
be,  unless  the  agreements  are  to  be  treated  as  **  scraps 
of  paper,'*  concerted  action  upon  the  part  of  the  Powers. 
Upon  this  point  it  is  also  to  be  observed  that  the  mutual 
promises  which  the  Powers  have  made  would  lose  a  great 
deal  of  their  operative  force  in  cases  in  which  the  Chinese 
Government  itself  should  consent,  or  appear  to  consent, 
to  the  annexation  of  a  portion  of  her  territory  by  another 
State.  China  will,  therefore,  be  ill-advised  if  she  does 
not  bear  constantly  in  mind  the  fate  of  Korea.  That 
country  had  had  its  sovereignty  guaranteed  by  several  of 
the  Powers,  and  especially  and  repeatedly,  by  Japan,  and 
yet,  when  Japan  exhibited  to  the  world  a  document  pur- 
porting to  be  a  treaty  signed  by  the  Government  of  Korea 
consenting  to  annexation,  the  other  Powers,  even  those 
which,  like  the  United  States,  had  promised  to  exert  good 
offices  in  case  other  Powers  should  threaten  it,  did  not 
feel  called  upon  to  go  back  of  the  formal  instrument  of 


264      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

annexation  in  order  to  determine  the  circumstances  under 
which  it  had  been  negotiated  and  the  signatures  to  it 
obtained.2<> 

Administraitive  Integrity  of  China.  Administrative 
integrity  is  a  concept  quite  distinct  from  that  of  terri-. 
torial  integrity :  it  refers  to  the  right  of  a  State  to  operate 
its  own  administrative  services  free  from  foreign  dicta- 
tion and  control.  In  the  pages  which  have  preceded  it 
wiU  be  noticed  that  in  none  of  the  undertakings  entered 
into  between  the  Treaty  Powers  with  reference  to  China 
was  there  mention  of  China's  administrative  integrity. 
In  fact,  China  has  been  obliged  to  submit  to  a  consider- 
able amount  of  foreign  administrative  control.  Not  to 
mention  the  fact,  which  will  later  appear,  that  her  rail- 
roads have  been  built  almost  wholly  with  foreign  capital, 
the  loans  of  which  have  carried  with  them  more  or  less 
operating  control  by  those  who  have  provided  the 
moneys — control  which  in  a  number  of  cases  has  been  for 
the  purpose  not  so  much  of  guaranteeing  the  security  of 
the  investments,  as  for  political  purposes,  and  as  provid- 
ing for  the  operation  of  the  roads  by  corporations  that, 
to  all  intents  and  purposes  are  not  private  concerns  but 
direct  agencies  of  the  governments  of  the  foreign  Powers 

*"  By  Article  I  of  the  Treaty  of  Amity  and  Commerce  of  May  22,  1882, 
between  the  United  States  and  Korea  it  was  provided  that  "  there  shall 
be  perpetual  peace  and  friendship  "  between  the  rulers  and  citizens  of  the 
two  countries,  and  that  "  if  other  Powers  deal  tm justly  or  oppressively 
with  either  Government,  the  other  will  exert  their  good  oflBces,  on  being 
informed  of  the  case,  to  bring  about  an  amicable  agreement,  thus  showing 
their  friendly  feelings."  Relying  upon  this  promise,  the  King  of  Korea 
appealed,  but  without  avail,  to  the  United  States  in  1905  at  the  time 
when  Japan  established  her  protectorate  over  his  country.  As  to  this,  see 
especially  the  statement  of  H.  B.  Hulbert  published  in  the  Congressional 
Record  of  August  18,  1919. 


THE  OPEN  DOOE  265 

concerned — in  addition  to  this  control,  China  has  been 
obliged  to  place  two  of  her  most  important  revenue 
services — ^the  salt  tax  or  Gabelle,  and  the  Maritime  Cus- 
toms— ^under  the  overhead  administrative  direction  of 
foreigners.  Also  she  has  undertaken  to  appoint  a  French- 
man as  the  head  of  her  postal  system.  China,  still  fur- 
ther, has  been  obliged  to  appoint  a  considerable  number 
of  foreigners  as  *  *  advisers, ' '  civil  and  military,  political, 
legal  and  administrative.  These  advisers  have  not  been 
given  powers  of  administrative  control,  but,  in  fact,  in 
a  number  of  instances,  are  able  to  exercise  a  considerable 
amount  of  directing  authority.  In  other  cases,  however, 
these  advisers  have  had  little  or  no  influence  upon  the 
government,  their  appointment  being  practically  forced 
upon  the  Chinese  Government  which,  though  compelled  to 
pay  their  salaries,  has  not  been  disposed  to  make  any 
more  use  of  their  services  than  it  has  been  compelled,  by 
foreign  pressure,  to  do.  Especially  during  recent  years 
the  financial  necessities  of  the  Chinese  Government  have 
forced  it  to  make  loans,  mostly  from  Japan,  which  have 
carried  with  them  the  right  of  the  parties  advancing  the 
loans  to  exercise  supervision  and  control  in  matters  of 
banking,  mining,  forestry,  and  the  like. 

The  United  States  has,  in  the  past,  sought  to  discour- 
age invasions  of  the  administrative  integrity  of  China. 
In  1913,  the  American  bankers  were  forced  to  withdraw 
from  the  financial  **  Consortium  "  which  was  then  nego- 
tiating a  large  loan  to  China,  because  the  American 
Government  declared  that  these  loans  carried  with  them 
invasions  of  China's  administrative  integrity  of  which  it 
disapproved.  At  the  present  time  (1920),  however,  the 
American  Government  is  taking  the  lead  in  an  effort  to 


266      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

establish  an  international  banking  group  wbich  will  have 
charge  of  all  future  public  loans  to  China,  and  possibly, 
also,  to  take  over  a  number  of  such  loans  already  made ; 
and  it  is  practically  certain  that  the  expenditures  of  the 
moneys  thus  advanced  will  be  controlled  by  the  "  Consor- 
tium "  which,  of  course,  wiU  mean  a  considerable  amount 
of  administrative  control  in  China.  The  truth  is  that  so 
disturbed  have  been  the  domestic  affairs  of  China  since 
the  Revolution  of  1911,  and  so  demoralized  have  her 
administrative  services  become,  and  so  desperate  her 
financial  condition,  that  this  foreign  administrative 
control  is  imperative  if  China  is  to  retain  her  sovereignty 
and  peace  and  order  are  to  be  restored.  Upon  this  point, 
more  wiU  be  said  in  a  later  chapter.  This  one  distinction, 
however,  needs  here  to  be  made.  The  acceptance  by,  or 
the  imposition  upon,  the  Chinese  people  of  foreign  over- 
head administrative  control  does  not  necessarily  involve 
the  taking  of  the  operations  of  the  Government  services 
out  of  the  hands  of  the  Chinese  themselves.  It  merely 
means,  or,  at  least,  need  mean  no  more  than  that  a  foreign 
supervision  is  permitted  and  the  right  given  to  those 
exercising  it  to  prevent  the  expenditure  of  money  or  the 
taking  of  other  action  which,  in  their  opinion,  is  in  viola- 
tion of  the  engagements  which  the  Chinese  Government 
have  made  or  seriously  prejudicial  to  the  efficiency  and 
honesty  of  the  administrative  services  that  are  involved. 
Even  should,  in  certain  cases,  these  foreign  supervisors 
be  given  the  right  to  issue  general  orders  which  are 
required  to  be  obeyed,  the  actual  operation  of  the  services 
could  be  left  in  Chinese  hands. 


CHAPTER  X 

Spheees  of  Interest — French,  English  and  Eussian 


Since  the  time  of  the  Nanking  Treaty  in  1842  until  the 
Sino-Japanese  War  of  1894-1895,  China  had  been  repeat- 
edly compelled,  against  her  will,  to  cede  to  foreigners 
rights  and  privileges  within  her  borders,  and  from  time 
to  time  she  had  lost  certain  portions  of  her  territory  and 
been  obliged  to  renounce  her  suzerain  claims  over  certain 
dependencies.  But  these  territorial  losses  had  not  been 
of  a  character  really  to  endanger  the  continuance  of 
China  as  a  great  sovereign  power,  and  the  rights  which 
she  had  granted  to  foreigners  were,  with  only  a  few 
exceptions,  given  without  discrimination  to  the  nationals 
of  all  the  Treaty  Powers. 

Territorial  Losses  of  China.  By  the  Treaty  of  Nanking 
of  1842  China  ceded  the  small  island  of  Honkong  to 
Great  Britain,  but  this  was  of  commercial  benefit  to  her 
as  well  as  to  the  other  Powers,  for  it  was  immediately 
developed  as  a  great  free  port  open  without  discrimina- 
tion to  the  ships  of  all  nations. 

By  treaties  with  Russia  entered  into  in  1858  and  1860 
China  parted  with  the  immense  area  lying  north  of  the 
Amur  River  and  east  of  the  Ussuri,  thus  giving  Russia 
the  seacoast  down  to  the  upper  eastern  comer  of  Korea. 
In  1884  (May  11)  Annam  was  definitely  lost  by  China  to 
France.  In  1885  and  1886  Indo-China  was  lost  by  her 
to  France,  and  in  the  latter  year,  by  the  O'Connor  Con- 

267 


268      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

vention,  Burma  passed  under  the  complete  control  of 
Great  Britain.^ 

In  1887  Macao,  for  all  practical  purposes,  was  annexed 
by  Portugal.- 

By  the  treaty  of  Shimonoseki  ^  which  concluded  the 
Sino-Japanese  War,  China  lost  to  her  victorious  foe  the 
great  island  of  Formosa  and  the  Pescadores  group  of 
islands,  and  also  the  Liaotung  Peninsula.  This  last,  how- 
ever, as  is  well  known,  was  retroceded  to  her  by  Japan  * 
acting  under  pressure  from  Russia,  Grermany,  and  France, 
only  to  be  leased  a  few  years  later  to  Russia.^  In  addition, 
China  was  forced  to  renounce  all  claims  of  suzerainty 
over  Korea. 

These  were  considerable  territorial  losses,  but  they  did 
not  endanger  the  sovereignty  nor  make  serious  inroads 
upon  the  territorial  integrity  of  China  proper,  that  is,  of 
the  Eighteen  Provinces  and  Manchuria.  Within  this 
vast  territory  over  which  the  Peking  Government  had 
full  sovereign  rights,  rather  than  vague  suzerain  claims, 
China  had  been  obliged  to  grant  to  foreigners  extraterri- 
torial and  other  rights,  but  it  was  of  great  advantage  to 
her  that  these  rights  were,  in  general,  possessed  without 

*  In  this  Convention  China  agreed  that  "  in  all  matters  whatever  apper- 
taining to  the  authority  and  rule  which  England  is  now  exercising  in 
Burma,  England  shall  be  free  to  do  whatever  she  deems  fit  and  proper." 
Sikkim  also  went  to  England  in  1890. 

*By  the  Lisbon  Protocol  of  March  26,  1887,  China  recognized  the  per- 
petual occupation  and  government  of  Macao  by  the  Portuguese.  Boundary 
matters  have,  however,  continued  to  the  present  time  to  furnish  a  subject 
for  dispute  between  China  and  Portugal.  Macao  had  first  been  occupied 
by  the  Portuguese  in  the  sixteenth  century.  In  1840  they  refused  to  con- 
tinue paying  rent  to  the  Chinese  and  drove  out  Chinese  taxing  and  other 
authorities. 

*  MacMurray,  No.  1895/3.  » Id.,  No.  1898/6. 

*  Id.,  No.  1895/10. 


SPHERES  OF  INTEREST  269 

discrimination  by  the  nationals  of  all  the  Treaty  Powers. 
The  only  exceptions  to  this  rule  were  with  regard  to 
certain  special  privileges  which  France  had  been  able  to 
obtain  in  the  south  by  the  Treaty  of  Tientsin  of  June, 
1885;  some  concessions  and  promises  to  counteract  the 
French  privileges,  which  Great  Britain  had  secured  in 
the  Yangtze  Valley,  and  some  special  rights  secured  by 
Eussia  with  reference  to  trade  across  the  border  between 
Manchuria  and  Siberia. 

Following  the  exhibition  of  her  weakness  in  the  Sino- 
Japanese  War,  however,  events  took  a  decided  change 
for  the  worse  for  Chiaa,  and  especially  were  the  years 
1898  and  1899  disastrous  for  her.  It  was  not  simply,  as 
we  have  already  seen,  that  China  was  obliged  during 
these  two  years,  under  the  form  of  leases,  to  part  with 
actual  administrative  and  political  control  of  areas  of 
great  strategical  importance,  but  that  she  found  herself 
obligated  to  give  formal  recognition  to  the  claims 
advanced  by  certain  of  the  Treaty  Powers  to  preferential 
treatment  as  regards  railway  and  mining  concessions 
within  specified  portions  of  her  national  territory.  Thus, 
in  effect,  the  greater  part  of  China  became  marked 
into  what  have  come  to  be  known  as  Spheres  of  Interest. 
It  is,  therefore,  no  wonder  that  it  seemed  to  many  at  the 
time  that  the  *'  Breakup  of  China'*  was  impending,  and 
that  there  was  to  be  a  scramble  among  the  leading 
Treaty  Powers  to  divide  the  helpless  Empire  among 
themselves,  with  what  resulting  quarreling  and  possible 
wars,  between  those  participating  or  refused  participa- 
tion in  the  division,  no  one  could  foresee  but  all  could 
apprehend. 


270      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

That  thus  was  furnished  abundant  opportunity  for 
friction  between  the  Powers  which,  even  if  it  did  not  lead 
to  war,  might  result  in  mutually  discriminatory  action 
that  would  be  commercially  costly  to  all  concerned,  was 
evident.  In  the  preceding  chapter  we  have  already  traced 
the  attempt  that  was  made,  America  taking  the  lead,  to 
obtain  formal  reciprocal  pledges  from  the  Powers  that 
held  leases  and  claimed  spheres  of  interest  in  China, 
that  they  would  respect  the  sovereignty  and  territorial 
integrity  of  China  and  grant  to  the  nationals  of  all  the 
Powers  equal  opportunities  for  trade  and  commerce 
within  their  spheres  or  leased  areas.  And,  in  later 
chapters,  we  shall  consider  how  far  the  engagements  thus 
entered  into  have  been  carried  out  by  the  different 
nations  either  in  the  letter  or  the  spirit.  We  shall  also 
find  it  necessary  to  examine  the  **  Special  Interests  '*  of 
certain  countries  as,  for  example,  Russia  in  North  Man- 
churia, and  Japan  in  South  Manchuria  and  Shantung,  to 
see  in  what  respect  these  interests  are  distinguishable 
from  the  privileges  claimed  in  the  "  Spheres  of  Inter- 
est '*  and  to  what  extent  they  may  be  harmonized  with 
the  principle  of  the  *  *  Open  Door. ' '  In  the  present 
chapter,  however,  we  shall  confine  our  attention  to  the 
Spheres  of  Interest  claimed  in  China  by  the  different 
Powers. 

Spheres  of  Interest  and  Spheres  of  Influence  Defined. 

The  term  **  sphere  of  influence  "  is  not  infrequently, 
but  never  officially,  it  is  believed,  employed  in  China  as 
synonymous  with  the  term  **  sphere  of  interest."  This 
latter  term  is  certainly  to  be  preferred,  but  in  some 
respects  it  is  unfortunate  that  either  expression  should 


SPHERES  OF  INTEREST  271 

have  found  currency  in  China,  for,  as  here  applied,  they 
both  carry  with  them  connotations  quite  different  from 
those  that  are  usually  attached  to  them  by  international 
law  writers.  In  China  it  will  be  found  that  a  sphere  of 
interest  has  only  an  economic,  or,  at  the  most,  only  a 
quasi  or  incidentally  political  meaning,  whereas  this 
expression,  as  well  as  that  of  sphere  of  influence,  has  a 
decidedly  political  signification  when  applied  to  regions  in 
other  parts  of  the  world  and  especially  in  Africa.  Thus, 
for  example,  Cobbett  writes: 

A  Sphere  of  Influence  so  far  as  it  can  be  said  to  possess  a  dejfinite 
meaning,  indicates  a  region,  generally  inhabited  by  races  of  inferior 
civiKzation,  over  which  a  State  seeks,  by  compact  with  some  other 
State  or  States  that  might  otherwise  compete  with  it,  to  secure  to 
itself  an  exclusive  right  of  making  future  acquisitions  of  territory 
(whether  by  annexation  or  by  the  establishment  of  protectorates), 
and,  generally,  also,  the  direction  and  control  of  the  native  in- 
habitants.* 

It  wiU  clearly  appear  that,  as  thus  defined,  the  term 
Sphere  of  Influence  has  no  application  in  China.  In  the 
first  place,  it  wiU  appear  that  the  starting  points  of  the 
Spheres  of  Interest  in  China  (not  of  Influence)  have  been 
agreements  with  China  herself,  in  which  she  has  promised 
not  to  alienate  to  a  foreign  power  the  areas  concerned. 
In  the  second  place,  these  agreements  have  not  been 
predicated  upon  the  idea  that  the  Chinese  are  a  race  of 
inferior  civilization.  In  the  third  place,  the  Powers  con- 
cerned have  never  claimed,  overtly  at  least,  an  exclusive 
right  of  making  future  acquisitions  of  territories  within 
their  respective  spheres.  Should  the  breakup  of  China 
ever  occur,  it  is  not  unlikely  that  the  Powers  possessing 

•  Cases  and  Opinions  on  International  Lane,  Vol.  i,  Peace,  p.  113. 


272      FOKEIGN  EIGHTS  AND  INTEKESTS  IN  CHINA 

Spheres  of  Interest  would,  among  themselves,  claim  a 
preferential  right  to  make  annexations  within  their 
respective  spheres. 

Under  the  rubric  "  Spheres  of  Interest,**  Cobbett  says : 

"  Somewhat  different  [from  Spheres  of  Influence]  as 
regards  their  object  are  those  agreements  which  allocate 
certain  areas  already  occupied  by  States  more  or  less 
civilized  as  spheres  of  influence  or  interest  between 
Powers,  having  already  interests  adjacent  thereto; 
although  the  line  between  these  and  the  former  is  some- 
times difficult  to  draw."  As  instances,  Cobbett  cites  the 
agreement  of  1896  between  France  and  Great  Britain 
with  respect  to  Siam,  and  in  1904  with  respect  to  Egypt 
and  Morocco;  and  also  the  agreement  between  Great 
Britain  and  Eussia  made  in  1899  with  regard  to  certain 
regions  in  China.'' 

Here  also,  it  will  appear  that  the  definition  does  not 
apply  to  Spheres  of  Interest  such  as  are  found  in  China. 

It  is  apparent  also  that  to  W.  E.  HaU,  the  idea  of  a 
sphere  of  influence  or  of  interest — he  does  not  distinguish 
between  the  two  terms — as  known  to  international  law 
has  no  application  to  countries  like  China  but  only  to 
uncivilized  States  and  especially  to  those  of  Africa.® 

The  term  Sphere  of  Influence,  he  says,  "  indicates  the 
regions  which  geographically  are  adjacent  to  or  politi- 
cally group  themselves  naturally  with,  possessions  or 
protectorates,  but  which  have  not  actually  been  so 
reduced  into  control  that  the  minimum  of  the  powers 
which  are  implied  in  a  protectorate  can  be  exercised  with 
tolerable   regularity.    It   represents  an  understanding 

*  See  post,  p.  283. 

•  See  also  Moore,  Digest  of  International  Law,  i,  269,  and  Lawrence, 
International  Law,  Sec.  81. 


SPHERES  OF  INTEREST  273 

whicli  enables  a  State  to  reserve  to  itself  a  right  of 
excluding  other  European  powers  from  territories  that 
are  of  importance  to  it  politically  as  affording  means  of 
future  expansion  to  its  existing  dominions  or  protec- 
torates, or  strategically  as  preventing  civilized  neighbors 
from  occupying  a  dominant  military  position.  * '  ® 

Westlake  gives  us  the  best  examination  of  the  subject. 
This  discussion,  which  he  gives  under  the  heading 
"  Spheres  of  Influence  or  Interest,"  he  divides  under 
two  sub-heads :  *  *  Agreements  for  Reciprocal  Abstention 
from  Territorial  Expansion,"  and  "  Agreements  not  to 
Alienate  Territory,"  and  it  is  under  this  second  sub-head 
that  he  refers  to  the  situation  in  China. 

In  the  case  of  China,  as  has  been  already  said,  the 
Spheres  of  Interest  so  far  as  they  have  a  treaty  or  other 
conventional  origin,  are  based  upon  agreements  between 
China  and  the  individual  Powers,  which  treaties  have, 
ex  propria  vigore,  no  binding  force  upon  other  Powers, 
except  such  as  becomes  later  attached  to  them  by  reason 
of  long  continued  tacit  or  explicit  acquiescence  upon  the 
part  of  the  other  Powers.  In  some  cases,  however,  as 
will  presently  be  seen,  there  have  been  agreements 
entered  into  between  certain  of  the  Treaty  Powers  in 
which  they  have  defined  and  mutually  agreed  to  recognize 
determinate  territorial  spheres  of  interest  in  China 
claimed  by  each. 

Implications  of  Sphere  of  Interest.  In  substance  the 
Powers  laying  claim  to  these  spheres  have  sought  to 
establish  the  following  implications: 

(1)  The  guarantee  on  the  part  of  China  that  the  areas 
in  question  will  not  be  alienated  to  any  foreign  Power. 

•  International  Load,  5th  ed.,  129. 
18 


274      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

(2)  The  understanding,  more  or  less  definite  and 
explicit,  that  the  Power,  or  its  nationals,  claiming  the 
sphere  shall  have  preferential  or,  in  some  matters,  prac- 
tically exclusive  rights,  with  regard  to  the  making  of 
loans,  the  constructing  of  railways,  the  opening  and 
operating  of  mines,  and  the  carrying  out  of  public  enter- 
prises, such  as  conservancy  works,  etc.  In  some  cases, 
also,  it  has  been  sought  to  have  it  accepted  that  in  the 
employment  of  ''  advisers  "  or  other  scientific  experts, 
nationals  of  the  Power  in  question  should  be  preferred. 
These  desired  implications  have  in  some  cases  received 
more  or  less  explicit  statement  in  certain  of  the  treaties 
with  China,  especially  in  those  with  France  relating  to 
rights  in  Yunnan  and  Kwangsi,  and  those  with  Japan 
relating  to  South  Manchuria.  The  Treaty  Powers,  how- 
ever, have  never  accepted  the  general  principle  that  a 
claim  to  a  Sphere  of  Interest  necessarily  implies  a  right 
to  such  preferential,  and  certainly  not  to  exclusive  treat- 
ment. 

Especially  important  in  these  Spheres  has  been,  and 
is,  the  matter  of  railway  construction  and  operation 
and  the  opening  up  and  operating  of  coal  and  iron 
mines.  With  regard  to  constructing  and  operating  rail- 
ways it  will  be  found  that  important  differences  have 
distinguished  the  various  *  *  concessions  ' '  which  have 
been  granted.  In  some  cases  these  grants  have  carried 
with  them  only  financial  interests ;  in  others,  there  have 
been  important  political  implications.  Especially  has 
this  been  true  in  those  cases  in  which  the  railways  have 
been  operated  by  companies  which,  though  nominally 
private  concerns,  have  in  fact  been  direct  agencies  of  the 
governments  creating  them.     This,  it  will  appear,  has 


SPHERES  OP  INTEREST  275 

been  true  of  the  Russian  and  Japanese  railways  in  Man- 
churia (The  Chinese  Eastern  Railway  and  the  South 
Manchuria  Railway),  the  German  railways  in  Shantung, 
and  the  French  railway  from  Indo-China  into  the 
Province  of  Yunnan.  In  these  cases  the  ' '  railway  areas  ' ' 
have  constituted  virtual  imperia  within  the  imperium  of 
China.  In  other  railway  concessions  the  control  exer- 
cised by  those  advancing  the  funds,  aside  from  guaran- 
tees for  their  repayment,  has  included  rights  of  super- 
vision of  construction  and  operation,  and  preference  in 
the  supply  of  material. 

One  general  feature  regarding  these  concessions  is 
that,  though  granted  to  private  parties,  their  respective 
Governments  have,  in  practically  all  cases,  given  to  them 
their  active  diplomatic  support,  and,  what  is  perhaps  still 
more  important,  these  Governments  usually  have  taken 
the  ground  that  if,  for  any  reason,  the  concessionaires 
surrender  or  forfeit  their  rights,  China  is  obligated,  if 
the  concession  is  again  made,  to  offer  it  to  others  of  their 
nationals  before  offering  it  to  citizens  of  another  Treaty 
Power.  In  other  words,  the  position  is  taken  that  the 
right  having  been  originally  granted  at  the  solicitation 
of  the  Chancellery  of  a  nation,  that  nation  has,  as  it  were, 
a  vested  interest  in  the  grant. 

These  explanations  having  been  made,  we  are  now 
prepared  to  consider  under  separate  heading  the  several 
* '  Spheres  of  Interest  ' '  which  certain  of  the  Powers  have 
managed  to  build  up  for  themselves  in  China. 

French  Sphere.  The  French  Sphere  of  Interest  lies 
wholly  in  the  south  and  borders  France's  Indo-Chinese 
colonial  possessions. 


276      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

By  a  declaration  of  March  15,  1897,^°  China  promised 
France  that,  attaching  great  importance  to  the  island  of 
Hainan,  it  would  never  be  *  *  alienated  or  ceded  by  China 
to  any  other  foreign  Power,  either  as  final  or  temporary 
cession,  or  as  a  naval  station  or  coaling  depot." 

Before  this  time,  in  1884,  France  had  promised  China 
in  the  Foumier  Convention  to  protect  the  southern  fron- 
tier of  China  against  attacks  from  any  other  nation,  and 
in  a  treaty  of  the  next  year  China  had  agreed  to  apply 
to  the  French  for  materials  in  case  she  should  construct 
railways  in  that  region.^^ 

It  will  be  seen  that  by  this  treaty  of  1885  France  made 
the  first  breach  in  the  principle  of  equal  opportunity  for 
commercial  penetration  of  China  that  had  previously 
prevailed,  and  it  will  also  be  seen  that  this,  in  turn,  led 
Great  Britain  to  obtain  assurance  of  her  preferential 
position  in  the  Yangtze  Valley. 

In  1895  by  a  treaty  signed  at  Peking  on  June  20 
between  France  and  China  ^^  it  was  provided  that 
**  Chinese  goods  in  transit  from  one  or  the  other  of  the 
four  towns  open  to  commerce  on  the  frontier,  Lungchou, 
Mengtse,  Ssumao  and  Hokou,  in  passing  through  Aomam, 
will  pay  on  leaving,  duties  reduced  by  four-tenths  ";  and 
also  that  *  *  Chinese  goods  exported  from  the  four  above- 
named  locations  and  transported  to  Chinese  maritime  or 
river  ports,  open  to  commerce,  shall  pay  on  passing  the 
frontier  export  duty  reduced  by  four-tenths.  A  special 
certificate  will  be  delivered  setting  forth  the  payment  of 
this  duty,  and  destined  to  accompany  the  goods.  When 
they  shall  arrive  at  one  of  the  maritime  or  river  ports 

>•  MacMurray,  No.  1897/2.  »  See  treaty  of  1885. 

"•Jd.,  No.  1895/5. 


SPHEEES  OF  INTEKEST  277 

open  to  commerce,  they  shall  pay  the  half  re-importation 
duty  in  conformity  with  the  general  rule  for  all  goods  of 
like  nature  in  the  maritime  or  river  ports  open  to  com- 
merce." 

Chinese  goods  transported  from  Chinese  maritime  or  river  ports 
open  to  commerce,  by  way  of  Annam,  towards  the  four  above-named 
localities,  shall  pay  on  crossing  (the  frontier)  full  duty.  A  special 
certificate  will  be  delivered,  setting  forth  the  payment  of  this  duty, 
and  destined  to  accompany  the  goods.  When  they  shall  arrive  at 
one  of  the  frontier  customs  stations  they  shall  pay  on  entry  half 
re-importation  duty  based  on  the  reduction  by  four-tenths. 

By  Article  V  of  this  treaty  it  was  further  provided 
that: 

It  is  understood  that  China,  for  the  exploitation  of  its  mines  in 
the  provinces  of  Yunnan,  Kwangsi,  and  Kwantung,  may  caU  upon, 
in  the  first  instance,  French  manufacturers  and  engineers,  the 
exploitation  remaining  nevertheless  subject  to  the  rules  proclaimed 
by  the  Imperial  Government  as  regarding  national  industries.  It 
is  agreed  that  railways  either  those  already  in  existence,  or  those 
projected  in  Annam,  may,  after  mutual  agreement,  and  under  con- 
ditions to  be  defined,  be  continued  on  Chinese  territory.^' 

These  undertakings  on  the  part  of  China  were  more 
explicitly  defined  in  identic  notes  of  June  12,  1897,^' 
which  were  also  in  explanation  of  a  railway  contract 
which  had  been  entered  into  between  the  two  countries 
on  June  5, 1896.  These  notes  caused  it  to  be  understood 
that  as  soon  as  the  railway  from  Dongdang  to  Lungchou 
was  finished  a  request  would  be  made  to  continue  it  in 
the  direction  of  Nanning  to  Pese.  **It  is  understood, 
furthermore,"  the  notes  declare,  '*  that  the  right  will  be 
conceded  to  construct  a  railway  communication  between 

"  MacMurray,  annex  to  No.  1895/5. 


278      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

the  Annam  frontier  and  the  provincial  capital,  either  by 
way  of  the  Pese  River  region,  or  by  that  of  the  upper  Red 
River." 

By  an  exchange  of  notes  between  the  French  Minister 
and  the  Foreign  Office  in  China  on  April  10,  1898,^^ 
France  obtained  the  assurance  from  the  latter  that  none 
of  the  provinces  bordering  on  her  frontiers  should  ever 
be  ceded  to  any  other  Power.  This  assurance  ran  as 
follows : 

Our  Yamen  considers  that  the  Chinese  provinces  bordering  on 
Tongking,  being  important  frontier  points  which  interest  her  in 
the  highest  degree,  must  always  be  administered  by  China  and 
remain  under  her  sovereignty.  There  is  no  reason  that  they  should 
be  ceded  or  leased  to  any  Power. 

China  also  agreed  at  this  same  time  to  lease  to  France 
the  Bay  of  Kuangchouwan ;  to  organize  a  definite  postal 
system  with  a  high  functionary  at  its  head,  aided  by 
foreign  staff  officers  for  whose  appointment  account  was 
to  be  taken  of  the  recommendations  of  the  French  Govern- 
ment ;  and  the  following  railway  concession : 

The  Chinese  Government  grant  to  the  French  Government,  or  to 
the  French  Company,  which  the  latter  may  designate,  the  right  to 
make  a  railway  from  the  frontier  of  Tonking  to  Yunnanfu;  the 
Chinese  Government  having  no  other  responsibility  but  to  furnish 
land  for  the  road  and  its  dependencies.  The  route  of  this  line  is 
actually  surveyed  and  will  be  fixed  later  on  in  agreement  with  the 
two  governments.    Regulations  will  be  jointly  made. 

The  actual  lease  of  Kuangchouwan  Bay  was  effected, 
as  has  been  pointed  out  in  an  earlier  chapter,  by  the 
Convention  of  May  27,  1898.^'^  By  Article  VII  of  this 
Convention — 

" MacMurray,  No.  1898/6.  "Id.,  No.  1898/10. 


SPHERES  OF  INTEREST  279 

The  Chinese  Government  authorizes  France  to  construct  a  rail- 
way connecting  a  point  on  the  Bay  of  Kuangchouwan,  by  Leichou, 
with  a  point  to  be  designated  on  the  west  coast  of  Leichou,  in  the 
neighborhood  of  Onpu.  This  point  shall  be  precisely  designated 
later  on.  China  will  give  the  land,  but  the  expense  of  building 
and  working  shall  be  borne  by  France.  Chinese  shall  have  the  right 
to  travel  and  trade  on  the  railway  in  accordance  with  the  general 
tariff  in  force.  The  Mandarins  must  see  to  the  protection  of  the 
railway  and  the  stock,  but  the  repairs  and  maintenance  of  said 
road  and  its  stock  shall  be  at  the  expense  of  France. 

By  Article  VIII  it  is  also  provided  that  France  shall 
have  the  right  at  the  end  of  the  line  about  Onpu  to  build 
landing  stages,  wharves,  storehouses  and  hospitals,  place 
buoys,  lights,  etc.  ''  The  nearest  deep  water  anchorage 
to  this  terminus  (territorial  waters)  shall  be  exclusively 
reserved  for  French  and  Chinese  ships  of  war,  those  of 
the  latter  nationality  only  when  neutral. ' ' 

At  this  same  time  (May  28, 1898),  France  obtained  the 
assurance  of  the  Chinese  Government  that  only  the 
French  or  the  Franco-Chinese  Company  should  be  given 
the  privilege  of  constructing  railways  having  Pakhoi  as 
their  starting  point.  ^® 

It  will  not  be  here  necessary  to  consider  the  railway 
construction  that  has  actually  been  carried  out  under 
these  concessions,  but  with  regard  to  the  character  of  the 

"This  assurance  was  in  response  to  the  following  communication  which 
the  French  Minister  at  Peking  was  directed  by  his  Government  to  present 
to  China:  "The  recent  reports  of  our  consular  agents  show  the  interest 
we  have  in  developing  means  of  access  (voies  de  penetration)  in  the  region 
of  Kuangtung  and  Kuangsi  which  borders  the  Gulf  of  Tongking.  Be  good 
enough  to  ask  the  Chinese  Government  for  the  concession,  to  a  French 
company,  of  a  railway  destined  to  connect  the  port  of  Pakhoi  with  a  point 
to  be  fixed  upon  on  the  course  of  the  West  River:  such  concession  to  be 
tnade  on  lines  of  the  contract  entered  into  in  June,  1896,  for  a  railway 
from  Dongdang  to  Lungchow." 


280      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

*  *  control ' '  provided  for  in  the  financial  arrangements 
that  were  made  for  the  building  of  the  principal 
railway  —  the  Laokai-Yunnanfu  line — under  French 
auspices  and  within  the  French  Sphere  we  may  quote  the 
following  summary  of  the  London  Times  of  November 
20,  1903,  which  RockhiU  gives:" 

China  retains  full  sovereign  rights  over  the  hne,  which  in  the 
event  of  China's  being  at  war  will  not  be  considered  neutral,  but 
be  placed  under  Chinese  orders.  China  undertakes  the  sole  respon- 
sibility for  poHcing  and  protecting  the  railway,  and  on  no  account 
can  the  railway  ask  for  the  assistance  of  foreign  troops.  The  gen- 
eral superintendent,  the  deputy  superintendent,  and  the  technical 
staff  may  be  French,  the  final  decision  on  aU  technical  matters 
being  vested  in  the  general  superintendent.  China  grants  all  gov- 
ernment land  free,  but  private  property  must  be  purchased.  The 
railway  gives  the  f acihties  desired  by  China  for  the  carriage  of 
Imperial  mails  and  safeguards  all  geomantic  prejudices.  There  is 
to  be  no  Chinese  Government  guarantee;  the  period  of  the  con- 
cession is  eighty  years. 

Commenting  upon  these  conditions,  Overlach  says :  ^® 

The  Chinese  have  nothing  whatsoever  to  do  with  financing  or 
managing  of  the  line  and  they  are  deprived  of  all  control  and  profit. 
In  this  latter  respect  French  railway  rights  in  China  are  at  variance 
with  those  enjoyed  by  Russia  in  Manchuria,  for  Russia  .  .  .  had 
admitted  the  Chinese  to  financial  and  even  administrative  partici- 
pation— at  least  nominally.  But  otherwise,  there  is  Httle  distinc- 
tion between  French  and  Russian  "control";  although  French 
"  control "  is  nominally  exercised  by  a  private  company  and  is 
therefore  financial,  the  close  association  of  this  company  with  the 

**  P.  405,  note.  This  line  was  provided  for  by  the  Convention  of  April  9, 
1898,  the  conditions  governing  its  construction  and  operation  being  deter- 
mined by  an  agreement  with  the  Chinese  Government  of  October  29,  1903, 
for  a  translation  of  which  see  MacMurray,  No.  1903/6. 

*  Foreign  Financial  Control  in  China,  p.  130. 


SPHERES  OP  INTEREST  281 

Prench  Government  as  manifested  in  the  several  conventions  as 
well  as  the  motives  behind  French  railway  enterprise  in  Yunnan, 
leave  no  room  for  doubt  that  Prench  control  in  China,  embodied 
in  this  Prench  railway  concession,  is,  in  spirit,  somewhat  political. 
Nevertheless  (Overlach  adds)  Prench  policy  in  China  proper 
has  been  by  no  means  as  aggressive  as  that  of  Russia  before  the 
Russo-Japanese  War.  With  the  exception  of  a  few  unsuccessful 
attempts  at  further  concessions  in  the  southern  provinces,  which 
were  to  be  extensions  of  the  existing  railway  system.  Prance  did 
little  in  exploiting  her  sphere  politically.  Commercially,  however. 
Prance  took  full  advantage  of  her  privileged  position :  her  control 
enabled  her  to  establish  her  trade  at  the  expense  of  other  nations 
by  means  of  preferential  tariffs  to  the  furtherance  of  Prench  com- 
merce. 

British  Sphere.  To  counterbalance  the  growing  influ- 
ence of  Eussia  in  Manchuria,  of  the  Germans  in  Shan- 
tung, and  of  the  French  in  the  South,  Great  Britain 
sought  and  obtained  from  the  Chinese  Government  a  non- 
alienation  promise  with  regard  to  the  Yangtze  Valley. 
This  assurance  was  given  in  the  form  of  a  note  from  the 
Tsungli  Yamen  to  the  British  Minister,  dated  February 
11,  1898,"  and  ran  as  follows : 

The  Yamen  have  to  observe  that  the  Yangtze  region  is  of  the 
greatest  importance  as  concerning  the  whole  position  (or  interests) 
of  China,  and  it  is  out  of  the  question  that  territory  (in  it)  should 
be  mortgaged,  leased,  or  ceded  to  another  Power.  Since  Her 
Britannic  Majesty's  Government  has  expressed  its  interest  (or 
anxiety)  it  is  the  duty  of  the  Yamen  to  address  this  note  to  the 
British  Minister  for  communication  to  his  Government. 

Starting  from  this  slender  basis  of  a  promise  by  China 
to  herself  that  the  Yangtze  basin  would  never  be  leased 
or  ceded  to  any  other  Power,  that  is,  to  any  other  Power 

»  MacMurray,  No.  1898/1. 


282      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

than  China,  Great  Britain  has  built  np  for  herself  a  claim 
to  special  consideration  with  regard  to  the  granting  of 
railway  or  other  concessions  in  this  region.  She  there- 
fore vigorously  protested  the  granting  to  a  Belgian 
syndicate  (representing  undoubtedly  French  and  Russian 
interests)  of  a  concession  for  the  building  of  the  impor- 
tant railway  line  from  Peking  to  Hankow,  When,  not- 
withstanding her  protests,  the  final  contract  was  signed, 
the  Chinese  Government  was  informed  that  Great  Britain 
felt  that  she  had  not  been  properly  treated  and  that, 
therefore,  she  '  *  now  demanded  from  the  Chinese  Govern- 
ment the  right  to  build  the  following  lines  upon  the  same 
terms  as  those  granted  in  the  case  of  the  Belgian  line: 
Tientsin  to  Chinkiang  (to  be  shared,  if  desired,  with  the 
Germans  and  Americans),  Honan  and  Shansi,  Pekin 
Syndicate  lines  to  the  Yangtze;  Kowloon  to  Canton; 
Pukou  to  Sinyang;  Soochow  to  Hangchow,  with  exten- 
sion to  Ningpo." 

It  was  also  pointed  out  that  it  was  considered  that  the 
lines  from  Shanghai  to  Nanking  and  Shanhaikuan  to 
Newchwang  had  already  been  definitely  promised  to 
Great  Britain.20 

Anglo-Russian  Agreement  of  1899.  Something  very 
much  like  an  ultimatum  was  issued  to  the  Chinese  in 
connection  with  these  demands  and  China  at  once  yielded. 
The  railway  concessions  thus  promised  covered  a  total 
of  some  twenty-eight  hundred  miles  of  road,  lying  within 
ten  of  China's  Provinces.  Great  Britain  also  undertook, 
shortly  after,  to  finance  the  line  to  be  constructed  between 

»» China,  No.  1,  1899,  Vol.  c.  ix,  No.  382.  Quoted  by  Overlach,  op.  cit., 
p.  32. 


SPHEEES  OF  INTEREST  283 

Peking  and  Newchwang,  thus  entering  a  territory  which 
Russia  claimed  was  her  special  sphere.  This  led  to 
correspondence  between  the  two  governments  which  fin- 
ally resulted  in  the  signing  of  the  important  Anglo- 
Russian  Agreement  of  April  28,  1899,^^  according  to 
which  the  two  countries  defined  their  respective 
'*  spheres  "  and  agreed  mutually  to  respect  the  rights 
of  each  therein.  This  agreement  known  as  the  Scott- 
Mouravieff  agreement,  embodied  in  an  exchange  of 
identic  notes,  read  as  follows : 

Great  Britain  and  Russia,  animated  by  a  sincere  desire  to  avoid 
in  China  all  cause  of  conflict  on  questions  where  their  interests 
meet,  and  taking  into  consideration  the  economic  and  geographical 
gravitation  of  certain  parts  of  that  Empire,  have  agreed  as  follows : 

1.  Great  Britain  engages  not  to  seek  for  her  own  account,  or  on 
behalf  of  British  subjects  or  of  others,  any  railway  concessions  to 
the  north  of  the  Great  Wall  of  China,  and  not  to  obstruct,  directly 
or  indirectly,  applications  for  railway  concessions  in  that  region 
supported  by  the  Russian  Government. 

2.  Russia,  on  her  part,  engages  not  to  seek  for  her  own  account, 
or  on  behalf  of  Russian  subjects  or  of  others,  any  railway  conces- 
sions in  the  basin  of  the  Yangtze  and  not  to  obstruct,  directly  or 
indirectly,  applications  for  railway  concessions  in  that  region  sup- 
ported by  the  British  Government. 

The  two  Contracting  Parties,  having  nowise  in  view  to  infringe 
in  any  way  the  sovereign  rights  of  China  or  existing  Treaties,  will 
not  fail  to  communicate  to  the  Chinese  Government  the  present 
arrangement,  which,  by  averting  all  cause  of  complications  between 
them,  is  of  a  nature  to  consolidate  peace  in  the  Far  East,  and  to 
serve  the  primordial  interests  of  China  herself  .^^ 

«  MacMurray,  No.  1899/3. 

"  In  supplementary  notes  of  the  same  date  it  is  declared  that  the  main 
understanding  is  not  to  be  deemed  as  infringing  the  agreement  already 
arrived  at  with  regard  to  the  railway  line  from  Shanhaikuan  to  New- 
chwang for  the  construction  of  which  a  loan  had  already  been  contracted 


284      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Prior  to  this,  Great  Britain  and  Germany  had  come  to 
an  understanding  with  regard  to  the  rights  of  the  former 
in  the  Yangtze  Valley  and  of  the  latter  in  Shantung.  At 
the  time  that  she  obtained  the  lease  to  Weihaiwei,  Great 
Britain  had  assured  Germany,  that,  by  taking  this  step, 
she  had  '*no  intention  of  injuring  or  contesting  the  rights 
and  interests  of  Germany  in  the  province  of  Shantung, 
or  of  creating  difficulties  for  her  in  that  province.  It  is 
especially  understood  that  England  will  not  construct 
any  railroad  communication  from  Weihaiwei  and  the  dis- 
trict leased  therewith  into  the  interior  of  the  Province 
of  Shantung. ' '  ^3 

"Now,  at  meetings  held  in  London,  September  1  and  2, 
1898,  a  general  understanding  was  reached  between  the 

for  by  the  Chinese  Government  with  the  Hongkong  and  Shanghai  Bank 
acting  on  behalf  of  the  British  and  Chinese  corporation.  The  note  con- 
tinues : 

"  The  general  arrangement  established  by  the  above-mentioned  notes  is 
not  to  infringe  in  any  way  the  rights  acquired  under  the  said  loan  contract, 
and  the  Chinese  Government  may  appoint  both  an  English  engineer  and  a 
European  accoimtant  to  supervise  the  construction  of  the  line  in  question, 
and  the  expenditure  of  the  money  appropriated  for  it. 

"  But  it  remains  understood  that  this  fact  cannot  be  taken  as  consti- 
tuting a  right  of  property  or  foreign  control,  and  that  the  line  in  question 
is  to  remain  a  Chinese  line,  imder  the  control  of  the  Chinese  Government, 
and  cannot  be  mortgaged  or  alienated  to  a  non-Chinese  company. 

"  As  regards  the  branch  line  from  Siaoheishan  to  Sinminting,  in  addition 
to  the  aforesaid  restrictions,  it  has  been  agreed  that  it  is  to  be  constructed 
by  China  herself,  who  may  permit  European — ^not  necessarily  British — 
engineers  periodically  to  inspect  it,  and  to  verify  and  certify  that  the 
work  is  being  properly  executed. 

"  The  present  special  agreement  is  naturally  not  to  interfere  in  any  way 
with  the  right  of  the  Russian  Government  to  support,  if  it  thinks  fit,  appli- 
cations of  Russian  subjects  or  establishments  or  concessions  for  railways, 
which,  starting  from  the  main  Manchurian  line  in  a  southwesterly  direc- 
tion, would  traverse  the  region  in  which  the  Chinese  line  terminating  at 
Sinminting  and  Newchwang  is  to  be  constructed." 

"Rockhill,  p.  180:  MacMurray,  No.  1898/14  (note). 


SPHEEES  OF  INTEREST  285 

British  and  German  interests  regarding  railway  con- 
struction in  China.  This  understanding  was  embodied 
in  minutes  of  the  meeting,  signed  by  representatives  of 
the  German  Syndicate,  the  British  and  Chinese  Corpora- 
tion, Ltd.,  and  the  Hongkong  and  Shanghai  Banking 
Corporation.^* 

It  was  proposed  by  the  representative  of  the  German 
Syndicate,  Mr.  von  Hansemann,  that  the  British  and  Ger- 
man Spheres  of  Interest  *'for  applications  for  railway 
concessions  in  China  "be  as  follows : 

1.  British  Sphere  of  Interest,  viz. — The  Yangtze  Valley,  subject 
to  the  connection  of  the  Shantung  lines  to  the  Yangtze  at  Chink- 
iang;  the  provinces  south  of  the  Yangtze;  the  province  of  Shansi 
with  connection  to  the  Peking-Hankow  line  at  a  point  south  of 
Chengting  and  a  connecting  hne  to  the  Yangtze  Valley,  crossing 
the  Hoangho  Valley. 

2.  Germany  Sphere  of  Interest,  viz. — ^The  Province  of  Shantung 
and  the  Hoangho  Valley  with  connection  to  Tientsin  and  Cheng- 
ting,  or  other  point  of  the  Peking-Hankow  line  in  the  south  with 
connection  to  the  Yangtze  at  Chinkiang  or  Nanking.  The  Hoangho 
Valley  is  understood  to  be  subject  to  the  connecting  lines  in  Shansi 
forming  part  of  the  British  Sphere  of  Interest,  and  to  the  connect- 
ing Une  to  the  Yangtze  Valley,  also  belonging  to  the  said  Sphere 
of  Interest. 

This  proposal  was  agreed  to  with  the  following  altera- 
tions, viz : — 

The  Kne  from  Tientsin  to  Tsinan,  or  another  point  of  the  north- 
em  frontier  of  the  Province  of  Shantung,  and  the  line  from  the 
southern  point  of  the  Province  of  Shantung  to  Chinkiang  to  be 
constructed  by  the  Anglo-German  Syndicate  (meaning  the  German 
Syndicate  on  the  one  part,  and  the  Hongkong  and  Shanghai  Bank- 

**  These  were  the  institutions  enjoying  governmental  support  for  financing 
railway  concessions  in  China. 


286      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ing  Corporation  and  the  British  and  Chinese  Corporation,  Limited, 
on  the  other  part)  in  the  following  manner,  viz. — 

1.  The  capital  for  both  lines  to  be  raised  jointly. 

2.  The  line  from  Tientsin  to  Tsinan  or  to  another  point  on  the 
northern  frontier  of  the  Province  of  Shantung  to  be  built  and 
equipped  and  worked  by  the  German  group. 

3.  The  line  from  the  southern  point  of  the  province  of  Shantung 
to  Chinkiang  to  be  built  and  equipped  and  worked  by  the  English 
group. 

4.  On  completion  the  lines  to  be  worked  for  joint  account.^'' 

After  describing  the  various  conditions  under  which 
the  railways  in  China  built  by  British  interests  were  con- 
structed and  are  now  operated  Mr.  Overlach  says : 

On  the  strength  of  the  foregoing  analysis  we  now  draw  the  con- 
clusion that  British  control  in  China  consists  of  nothing  more  than 
safeguards  for  the  protection  of  the  bondholders  and  bankers, 
guaranteeing  proper  loan  fund  expenditure  and  adequate  return. 
British  control  in  China,  exercised  exclusively  by  private  corpora- 
tions, is  therefore  essentially  financial  and  non-political.  Its  non- 
political  character  may  be  further  illustrated  by  the  fact  that  the 
syndicate,  in  spite  of  its  monopoHstic  rights,  admitted  non-British 
interests  to  participation  in  its  privileges  within  the  British 
^here.^" 

Attempted  invasion  of  the  British  Sphere  by  Japan  in 
connection  with  the  Twenty-one  Demands  of  1915  will  be 
later  discussed. 

Russian  Sphere  —  Manchuria.  The  vast  stretch  of  ter- 
ritory to  the  north,  known  as  Manchuria  and  embracing 
nearly  four  hundred  thousand  square  miles  has  been  an 

"The  text  of  these  Minutes  is  given  by  Millard,  Our  Eastern  Question. 
Appendix  I,  p.  444.  See  also  "  China,"  No,  1,  1899,  Vol.  cix,  No.  312;  and 
Overlach,  op.  cit.,  p.  36.    MacMurray,  No.  1900/5  (note). 

*  Op.  cit.,  p.  60. 


SPHEKES  OF  INTEREST  287 

integral  part  of  China  since  the  middle  of  the  seventeenth 
century  when  the  Manchu  dynasty  mounted  the  Dragon 
Throne.  Since  that  time,  so  great  has  been  the  Chinese 
emigration  thither,  especially  during  recent  years,  the 
population  is  now  predominantly  Chinese.^^  The  re- 
gion is,  however,  not  densely  settled,  having  a  population 
of  less  than  fifteen  millions.  It  is  a  region  containing 
great  natural  resources — vast  amounts  of  excellent  agri- 
cultural lands,  great  areas  of  fine  forests,  and  rich  de- 
posits of  coal,  iron  and  other  minerals. 

Until  1907,  Manchuria  had  an  administrative  status  in 
the  Chinese  Empire  different  from  that  of  the  old  Eigh- 
teen Provinces,  but  in  that  year  was  divided  into  the 
three  so-called  Eastern  Provinces  of  Heilungchiang, 
Kirin  and  Fengtien  (Sheng  King)  and  these  provinces 
given  a  government  and  status  substantially  similar  to 
that  of  the  other  provinces  of  the  Empire. 

For  the  purposes  of  the  present  study  it  will  be  neces- 
sary to  consider  briefly  the  events  in  Manchuria  prior 
to  the  Russo-Japanese  "War  of  1904-1905,  because  the 
claims  of  Russia  in  this  region  throw  considerable  light 
upon  the  claims  that  have  later  been  made  by  Japan  as 
successor  to  the  Russian  rights  in  South  Manchuria,  and 

"  "  Manchuria  is  as  purely  Chinese  as  the  Yangtze  Valley."  This  is  the 
statement  of  Mr.  Putnam  Weale  in  1904,  Manchu  and  Muscovite,  Preface. 
The  Manchu  language  has  practically  disappeared  and  "  Mandarin  "  Chinese 
taken  its  place.  Mr.  Weale,  p.  539,  says:  "Considering  that  the  Manchu 
alphabet  was  non-existent  until  the  beginning  of  the  seventeenth  century, 
and  that  it  was  merely  invented  by  crudely  changing  the  Mongol  style  of 
writing,  that  the  Manchus  were  the  very  rudest  people  until  they  became 
civilized  through  contact  with  the  Chinese,  and  that  the  five  hundred  books 
in  the  Manchu  language  are  merely  imperfect  translations  of  Chinese 
originals,  it  will  be  readily  understood  how  soon  the  Manchus  lost  all 
knowledge  of  their  own  language." 


288      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

also  significance  attaches  to  the  purposes  alleged  by 
Japan  for  declaring  war.^^ 

The  annexation  by  Russia  of  the  Amur  region  and  the 
Coast  down  to  Korea  (the  Maritime  Provinces)  by  the 
treaties  of  1858  and  1860  has  already  been  mentioned. 
That  Russia  desired  to  bring,  and  if  she  had  not  been 
prevented,  would  have  brought,  all  of  Manchuria  under 
her  own  effective  administrative  control,  if  not  under 
her  avowed  sovereignty,  and  without  regard  to  her  re- 
peated promises  to  Japan  as  well  as  to  China,  is  without 
doubt.29 

It  will  be  remembered  that  in  1895  Japan,  imder  pres- 
sure from  Russia,  France  and  Germany,  was  obliged  to 
retrocede  to  China  the  Liaotung  Peninsula.  In  addition 
to  the  benefit  to  China  thus  secured,  in  part,  through 
Russia's  action,  the  Russian  Ministry  of  Finance  in  1895 
guaranteed  the  loan  to  China  of  400,000,000  francs  which 
was  issued  mostly  at  Paris  and  which  had  for  its  purpose 
the  payment,  in  part,  of  China's  indemnity  to  Japan.^** 

Cassini  Convention.  On  March  27, 1896  there  was  pub- 
lished in  the  North  China  Daily  News,  at  Shanghai,  what 

*In  K.  Asakawa's  The  Russo-Japanese  Conflict,  published  in  1904,  will 
be  found  an  excellent,  and  upon  the  whole,  an  objective  presentation  of  the 
negotiations  between  Japan  and  Russia  prior  to  the  war. 

*  "  In  her  descent  on  Asiatic  waters  Russia  has  been  impelled  neither  by 
the  need  of  extended  territory  nor  by  the  desire  for  commercial  relations 
with  other  countries.  Indeed  Russia's  trade  with  China  was  and  is  insig- 
nificant and  consists  mainly  of  importing  articles  of  Chinese  manufacture 
into  Russia,  notably  tea,  silks  and  drugs.  Her  ambitions  were  political 
and  her  absorptions  have  been  prompted  partly  by  a  craving  for  a  seaboard, 
partly  by  a  political  instinct  of  expansion,  and  partly  by  the  personal 
ambitions  of  a  few  statesmen."    Overlach,  Op.  cit.,  p.  70. 

*  The  remainder  of  the  indemnity  was  met  by  Anglo-German  loans.  For 
text  of  loan  agreement  and  of  contract  of  guarantee,  see  MacMurray,  Nos. 
1895/6  and  1895/7. 


SPHEKES  OF  INTEREST  38') 

purported  to  be  the  text  of  an  agreement  that  had  been 
entered  into  between  Russia  and  China.  In  the  October 
30, 1896,  issue  of  the  North  China  Herald  also  was  given 
the  text  of  this  alleged  agreement.^^  It  has  never  been 
admitted  by  the  parties  directly  concerned  that  this  agree- 
ment, which  has  come  to  be  known  as  the  '  *  Cassini  Con- 
vention "  was  entered  into,  and,  as  will  presently  be 
shown,  there  is  good  reason  for  believing  that  there  never 
was  such  a  convention  signed.  Inasmuch,  however,  as 
this  supposed  document  has  been  much  discussed,  and, 
because  most  of  the  promises  alleged  to  be  contained  in 
it  were,  in  fact,  soon  given  effect  to,  there  is  justification 
for  reproducing  the  following  summary  of  its  terms. 

The  object  is  declared  to  be  the  facilitating  of  trans- 
port of  goods  between  the  two  Empires  and  the  strength- 
ening of  the  frontier  defences  and  seacoast.  The  consi- 
deration for  the  special  privileges  granted  by  China  is 
declared  to  be  the  loyal  aid  given  by  Russia  in  the  retro- 
cession of  Liaotung  and  its  dependencies. 

1.  China  consents  to  the  prolongation  of  the  Russian 
Trans-Siberian  Railway  across  her  northern  territory  to 
the  Russian  port  of  Vladivostock. 

2.  All  railways  built  by  Russia  in  Chinese  territory 
are  to  be  constructed  at  the  sole  expense  of  Russia,  and 
Russia  is  to  have  entire  control  of  them  for  thirty  years, 
at  the  expiration  of  which  period  China  is  to  be  allowed 
to  redeem  them  together  with  rolling  stock,  machine 
shops  and  other  buildings. 

3.  If  China  is  obliged  to  borrow  money  to  complete 
her  projected  railways  from  Shanliaikuan  to  Mukden, 
Russia  shall  be  allowed  to  loan  the  amounts  needed. 

"Reprinted  in  Jkla^Murray,  No.  189G/5  (note). 
19 


290      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

4.  The  railways  to  be  built  by  China  from  Shanhai- 
kuan  to  Newchwang  to  Chinchow  to  Port  Arthur  and  to 
Talienwan  and  their  dependencies  shall  follow  Russian 
railway  regulations  in  order  to  facilitate  commercial  in- 
tercourse between  the  two  Empires. 

5.  Because  of  the  sparsely  inhabited  Chinese  terri- 
tories through  which  the  Russian  railway  will  pass  and 
the  consequent  difficulty  on  the  part  of  China  to  furnish 
adequate  police  protection,  Russia  shall  be  allowed  **  to 
place  special  battalions  of  horse  and  foot  soldiers  at  the 
various  important  stations  for  the  better  protection  of 
the  railway  property." 

6.  Customs  duties  collected  on  goods  exported  and 
imported  on  the  railways  are  to  be  according  to  the 
Russo-Chinese  treaty  of  commerce  of  February  20,  1862 
[O.  S.] 

7.  Russians  and  Chinese  shall  be  permitted  to  exploit 
and  open  any  of  the  mines  in  Northern  Manchuria,  but 
shall  first  obtain  the  necessary  permits  from  the  Chinese 
local  authorities  in  accordance  with  the  mining  regula- 
tions in  China  proper. 

8.  Should  China  in  the  future  decide  to  reform  in  ac- 
cordance with  the  Western  system  the  whole  army  organ- 
ization of  the  three  Manchurian — or  Eastern — Provinces, 
she  shall  be  permitted  to  engage  Russian  military  officers 
for  the  purpose. 

9.  China  is  to  lease  to  Russia,  as  an  ice-free  port,  the 
harbor  of  Kiaochow  for  a  period  of  fifteen  years.  How- 
ever, until  there  is  danger  of  military  operations,  Russia 
is  not  to  enter  into  possession — this  in  order  not  to  excite 
the  jealousy  and  suspicions  of  other  Powers. 

10.  Port  Arthur  and  Talienwan  being  important  stra- 


SPHERES  OF  INTEREST  291 

tegical  points,  China  is  to  fortify  them  with  all  haste, 
Russia  lending  all  necessary  assistance.  China  shall  not 
permit  any  foreign  Power  to  encroach  upon  these  points, 
and  obligates  herself  never  to  cede  them  to  another 
Power.  '  *  If,  in  future,  the  exigencies  of  the  case  require 
it,  and  Russia  should  find  herself  suddenly  involved  in  a 
war,  China  consents  to  allow  Russia  temporarily  to  con- 
centrate her  land  and  naval  forces  within  the  said  ports 
in  order  the  better  to  enable  Russia  to  attack  the  enemy 
or  to  guard  her  own  position." 

The  Li  Hung  Chang-Lobanoff  Treaty  of  Alliance  of  1896 
between  China  and  Russia.  Cordier  in  his  Histoire  des 
Relations  de  la  Chine,  published  in  1901,  pointed  out  that 
there  was  internal  evidence  to  show  that  the  alleged  Cas- 
sini  Convention  was  a  composite  of  two  documents — one 
relating  to  a  Manchurian  railway  and  the  other  to  the 
port  of  Kiaochow  and  other  matters.  It  is  now  pretty 
clear  that  one  of  these  documents  was  a  treaty  of  mili- 
tary alliance  entered  into  between  China  and  Russia  in 
May,  1896,  which  had  been  negotiated  with  Prince  Lo- 
banoff  by  Li  Hung  Chang  while  in  Moscow,^^  the  text  of 
which  was  first  made  known  to  the  public  in  the  London 
Daily  Telegraph  of  February  15,  1910.^*  M.  A.  Gerard, 
French  minister  to  China  from  1893  to  1897  in  his  re- 
cently (1918)  published  volume  Ma  Mission  en  Chine, 
confirms  this.^^ 

^  Ostensibly  to  attend  the  coronation  ceremonies  of  Czar  Nicholas. 

'^ MacMurray,  No.  1896/5  (note). 

^  Pp.  135-148.  Concluding  his  account  of  this  matter,  M.  Gerard  says 
(p.  147):  "Ces  divers  textes,  auxquels  la  presse  anglaise  donnait  le 
nom  de  *  la  convention  Cassini,'  etaient  apocryphes.  lis  confondaient  le 
traits  d'alliance  proprement  dit  et  le  eontrat  du  chemin  de  fer.     Selon 


292      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  treaty  of  alliance  of  May  1896  provided  that 
every  aggression  directed  by  Japan,  whether  against 
Russian  territory  in  Eastern  Asia  or  against  Chinese 
territory  or  Korea  should  bring  about  an  application  of 
its  terms;  in  which  case  the  two  Powers  would  support 
each  other  mth  all  their  land  and  sea  forces,  and  that  no 
treaty  of  peace  would  be  entered  into  by  the  one  party 
without  the  assent  of  the  other ;  and  that,  to  facilitate  the 
access  of  Russian  land  forces  to  the  menaced  points,  Rus- 
sia might  extend  her  Trans-Siberian  railway  across  the 
Chinese  provinces  of  Heilungkiang  and  Kirin  to  Vladi- 
vostock.  The  treaty  was  to  endure  fifteen  years,  six 
months  before  the  expiration  of  which  period  the  two 
countries  were  to  deliberate  as  to  its  prolongation. 

Chinese  Eastern  Railway.  In  1896  Russia  was  able  to 
obtain  from  China  formal  and  public  consent  to  extend 
the  Trans-Siberian  Railway  across  the  northern  end  of 
Manchuria  to  Vladivostock — entering  Manchuria  at  Man- 
chuli  or  Manchuria  station  and  running  through  Harbin. 

toute  vraisemblance,  ils  avaient  6t€  construits  et  fabriqu6s  d'aprfes  cer- 
taines  indisch^tions  arrach^s  aux  bureaux  du  Tsong-li  ya-men  par  un 
c«rtain  docteur  Dudgeon,  qui  6tait  alors  correspondant  du  Times  ft  P6kin. 
Les  fails  authentiques  ici  r6sum4s  ^tablissent  qu'il  n'y  a  pas  eu,  il  vrai 
lire,  de  *  convention  Cassini,'  que  la  traits  d'alliance  a  (ite  eonclu  k  Saint- 
Petersbourg  au  mois  de  mai  1896  entre  Li  Hong-tchang  et  le  prince 
Lobanoff,  que  le  contrat  de  chemin  de  fer  a  6i4  signg  le  8  septembre 
suivant,  a  Saint-P6tersbourg,  de  m6me,  par  le  ministre  de  Chine,  Hiu 
K'ing-tcheng,  et  les  dSl^gues  de  la  Banque  Russo-Chinoise,  et  que  c'est  ce 
contrat  dont  le  comte  Cassini  a  attendu  la  ratification  definitive  k  P6kin 
k  la  date  du  30  septembre,  avant  de  reprendre  lui-mfime  le  chemin  de  li 
Kussie." 

It  may  further  be  observed  that  the  Russian  representatives  at  the  Paris 
Peace  Conference  in  1918  are  reported  to  have  referred  to  the  Li  Hung- 
Chahg-Lobanoff  treaty  in  support  of  Russian  rights  in  Manchuria.  Sen 
also  J.  O.  P.  Bland,  Li  Hung-Chang,  Chap.  v. 


SPHERES  OF  INTEREST  293 

This  railway,  known  as  the  Chinese  Eastern  Railway, 
made  available  a  route  568  miles  shorter  than  one  run- 
ning wholly  within  Russian  territory.  The  concession 
for  the  construction  and  operation  of  this  railway  was 
granted  by  the  Chinese  Government  to  the  Russo-Chinese 
Bank  by  an  agreement  dated  September  8,  ISQG.^'^ 

It  will  be  important  to  set  forth  the  rights  granted  to 
the  Russo-Chinese  Bank,  that  is,  in  effect,  to  the  Russian 
Government,  with  some  detail  since,  so  far  as  north  Man- 
churia is  concerned,  they  still  determine  in  no  incon- 
siderable manner  the  rights  of  Russia. 

The  agreement  between  the  Chinese  Government  and 
the  Bank  provided  that  the  former  should  pay  to  the 
latter  five  million  Kuping  taels,  and  participate  in  pro- 
portion to  this  amount  in  the  profits  and  losses  of  the 
Bank,  and  that  the  Chinese  Government  having  decided 
upon  the  construction  of  a  railroad  establishing  direct 
communication  between  the  city  of  Chita  and  the  Russian 
South  Ussuri  Railway,  would  entrust  its  construction  and 
operation  to  the  Bank  upon  the  following  conditions : 

The  Bank  to  establish  a  railway  company  under  the 
name  of  the  Chinese  Eastern  Railway  Company  for  the 
construction  and  operation  of  the  proposed  road;  the 
shares  of  this  Company  to  be  acquired  and  held  only  by 
Chinese  and  Russian  subjects ;  the  president  of  the  Com- 
pany to  be  named  by  the  Chinese  Government  and  to 
reside  in  Peking,  but  to  be  paid  by  the  Company,  and  his 
duties  to  include  the  seeing  to  the  scrupulous  fulfilment 
by  the  Bank  and  the  Railway  Company  of  their  obliga- 
tions to  the  Chinese  Government  and  their  relation  to  the 
central  and  local  Chinese  authorities,  and  the  examina- 

«  MaeMurray,  No.  1896/5, 


294      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

tion  of  the  accounts  of  the  Chinese  Government  with  the 
Bank ;  the  Railway  Company  to  begin  construction  within 
a  year  and  to  finish  the  work  within  six  years ;  the  gauge 
of  the  road  to  be  the  Russian  gauge,  five  feet  (four  feet, 
two  and  a  half  inches,  Chinese.) 

Section  V  of  the  Agreement  provided:  ''  The  Chinese 
Government  wiU  take  all  measures  to  assure  the  safety 
of  the  railway  and  of  the  persons  in  its  service  against 
any  attack.  .  .  .  Criminal  cases,  lawsuits,  etc.,  upon  the 
territory  of  the  railway,  must  be  settled  by  the  local 
authorities  in  accordance  with  the  stipulations  of  the 
treaties." 

Section  VI  provided  that  the  railway  company  might 
acquire  lands  necessary  for  the  '*  construction,  opera- 
tion, and  protection  of  the  line,  as  also  lands  in  the  vicin- 
ity of  the  line  necessary  for  procuring  sand,  stone,  lime, 
etc.,**  these  lands  to  be  exempt  from  all  land  taxes,  and 
the  company  to  have  "  the  absolute  and  exclusive  right 
of  administration  of  these  lands.**  {La  Societe  aura  le 
droit  dbsolu  et  exclusif  de  V administration  de  ses  ter- 
rains). On  these  lands  the  company  was  to  have  the 
right  to  build  buildings  of  all  sorts  and  to  erect  and 
operate  telegraph  lines  necessary  for  the  needs  of  the 
line. 

These  jurisdictional  provisions,  as  will  presently  be 
seen,  became  of  great  importance,  since,  upon  them,  Rus- 
sia, and  later  Japan,  have  based  claims  to  political  juris- 
diction in  Manchuria  of  the  greatest  significance,  and 
these  claims  have  led  to  considerable  differences  of  opin- 
ion not  only  between  China  and  Russia  but  between  Rus- 
sia and  Japan  and  the  other  Treaty  Powers. 

All  Russian  troops  and  war  materials  carried  over  the 


SPHERES  OF  INTEREST  ^95 

line,  were  to  be  conveyed  *'  directly  from  one  Eussian 
station  to  another  without  for  any  pretext  stopping  on 
the  way  longer  than  is  strictly  necessary.'*  Chinese  Gov- 
ernment dispatches  and  letters  were  to  be  carried  by  the 
Company  free  of  cost,  and  Chinese  troops  and  munitions 
at  half  rates.  Passengers'  baggage,  as  well  as  merchan- 
dise dispatched  in  transit  from  one  Russian  station  to 
another,  were  to  pay  no  customs  duties  or  internal  taxes, 
but  such  merchandise  was  to  be  carried  in  special,  sealed 
vans.  Merchandise  imported  from  Russia  into  China  or 
from  China  into  Russia,  was  to  pay  only  two-thirds  of 
the  Chinese  Maritime  Customs,  and,  if  carried  into  the 
interior,  to  pay  a  further  one-third  which  was  to  exempt 
it  from  further  charges. 

rt  was  further  expressly  provided  that  the  Company 
having  the  exclusive  right  of  operating  the  line,  the  Chin- 
ese Government  was  to  be  in  no  case  responsible  for  any 
deficit  of  the  Company  *  *  during  the  time  allotted  for  the 
work  and  thereafter  for  a  further  eighty  years  from  the 
day  on  which  the  line  is  finished  and  traffic  is  in  opera- 
tion. This  period  having  elapsed,  the  line,  with  all  its 
appurtenances,  will  pass  free  of  charge  to  the  Chinese 
Government." 

Furthermore,  it  was  provided  that  at  the  expiration 
of  thirty-six  years  from  the  time  the  line  was  opened  to 
traffic,  the  Chinese  Government  should  have  the  right  to 
buy  back  the  line  **  upon  repaying  in  full  all  the  capital 
involved,  as  well  as  all  the  debts  contracted  for  this  line, 
plus  accrued  interest."^® 

After  commenting  on  the  fact  that  **  the  Company  is  a 

"The  line  was  opened  to  traffic  in  1901. 


296      FOREIGN'  RIGHTS  AND  INTERESTS  IN  CHINA 

Russian  joint  stock  company,  run  by  Russians,  with  Rus- 
sian money,  and  under  Russian  rules,"  Overlach  says: 

But  in  addition  to  the  fact  that  this  railway  company  is  of 
Russian  ownership,  we  must  bear  in  mind,  that  the  control  over 
the  owners  is  exercised  by  the  Russo-Chinese  Bank;  a  state- 
I'ontrolled  institution.  ...  To  disperse  any  doubt  about  the  mat- 
ter of  Russian  control  we  shall  support  our  contention  by  the  fol- 
lowing consideration:  Comparing  the  Russian  control  provisions 
with  those  to  be  found  in  the  British  agreements  we  find  that  no 
protection  is  made  for  the  shareholders,  who  are  the  nominal 
owners.  There  is  no  mortgage  on  the  railway,  because  there  is  no 
loan  made  to  the  Chinese  Government.  Only  the  bondholders  are 
protected,  namely,  by  a  Russian  Government  guarantee!  The 
management  rests  permanently  with  the  company,  though  nomi- 
nally under  Chinese  supervision.  In  fact  all  control  provisions 
characteristic  of  English  agreements  are  absent.^^ 

As  showing  the  actual  control  by  the  Russian  Ministry 
of  Finance  may  also  be  adduced  the  fact  that  for  years 
the  working  deficit  of  the  line  was  carried  in  the  Russian 
Government  Budget,  and  that  a  secret  Ukase  prescribed 
that  ofiScials  of  the  Railway  should  be  subject  to  the  same 
special  jurisdiction  as  officials  of  the  Government^* 

Russo-Chinese  Bank  Chartered.  In  December,  1896, 
was  chartered  ^®  by  the  Russian  Government  the  Russo- 
Chinese  Bank  (later  merged  with  the  Banque  du  Nord 
and  thereafter  known  as  the  Russo- Asiatic  Bank).  As 
described  in  its  charter,  this  institution  was  to  be  an 
agency  for  "  the  collection  of  duties  in  the  Empire  of 
China,  and  the  transactions  relating  to  the  State  treas- 

"  Foreign  Fitmncial  Control  in  China,  p.  82. 

"  See  MacMurray,  notes  attached  to  No.  1896/5. 

"ThiB  Charter  is  printed  in  MacMurray.  No.  1896/5  (note). 


SPHERES  OP  INTEREST  297 

ury  of  the  respective  place,  the  coinage,  with  the  author- 
ization of  the  Chinese  Government,  of  the  country's 
money,  the  payment  of  interest  on  loans,  concluded  by 
the  Chinese  Government,  the  acquisition  of  concessions 
for  the  construction  of  railways  within  the  boundaries  of 
China,  and  the  establishment  of  telegraph  lines." 

Port  Arthur-Harbin  Railway.  By  the  same  agreement 
with  China  by  which  Russia  obtained  in  1898  the  lease 
of  the  Liaotung  Peninsula,  she  also  secured  the  right  to 
construct  a  railway  north  from  Port  Arthur  and  Talien- 
man  to  the  Chinese  Eastern  Railway  running  east  and 
west  across  the  northern  part  of  Manchuria,  or  if  neces- 
sary a  branch  line  from  the  main  line  '*  to  a  convenient 
point  on  the  seacoast  in  the  Liaotung  Peninsula,  between 
Ying-Tzu  (Newchwang)  and  the  Yalu  River."  This  rail- 
way concession,  the  Lease  Agreement  declared,  was 
**  never  to  be  used  as  a  pretext  for  encroachment  on 
Chinese  territory  nor  to  be  allowed  to  interfere  with 
Chinese  authority  or  interests." 

Railway  Guards  and  Political  Jurisdiction.  It  would 
appear  that  China  did  not  give  to  Russia,  by  the  Agree- 
ment, authority  to  maintain  military  forces  or  guards 
along  the  Manchuria  railways.  If,  therefore,  she  had 
this  right,  it  must  have  been  obtained  under  some  secret 
agreement  such  as  the  military  alliance  of  1896. 

By  **  Statutes  "  promulgated  by  the  Russian  Govern- 
ment in  December,  1896,  for  the  administration  of  the 
affairs  of  the  Railway  Company  it  was  provided  (§  8) : 

The  Chinese  Government  has  undertaken  to  adopt  measures  for 
!-ecuring  the  safety  of  the  railway  and  all  employed  on  it  against 
extraneous  attacks.    The  preservation  of  law  and  order  on  the  lands 


298      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

assigned  to  the  railway  and  its  appurtenances  shall  be  confined  t*) 
police  agents  appointed  by  the  Company,  The  Company  shall  for 
this  purpose  draw  up  and  establish  police  regulations. 

It  appears  from  these  provisions  that  Russia  was  pre- 
paring to  exercise  within  the  railway  zones  a  political 
jurisdiction  which  had  not  been  conceded  by  the  Chinese 
Government.  The  Russians,  however,  sought  to  justify 
this  by  an  interpretation  of  the  grant  to  the  railway  com- 
pany of  le  droit  dbsolu  et  exclusif  de  V administration  de 
ses  terrains,  which  would  cause  the  right  to  include  not 
simply  the  business  operations  of  the  railway  upon  these 
lands,  but  the  exercise  of  political  control  over  all  persons 
who  might  be  or  live  within  these  areas — a  clear  mis- 
translation of  the  French  word  administration. 

However,  China  not  being  able  to  resist  this  encroach- 
ment upon  her  own  rights  as  the  territorial  sovereign  in 
Manchuria,  Russia  proceeded  to  maintain  armed  forces, 
termed  "  Railway  Guards  '*  or  **  Frontier  Guards  "  at 
points  along  the  railway  line  and  to  establish  rules  ac- 
cording to  which  foreigners  as  well  as  Russians  and 
Chinese  nationals  seeking  to  acquire  rights  of  residence 
or  to  hold  property  or  carry  on  business  affairs  within 
the  railway  zones,  should  sign  an  agreement  to  obey  all 
sanitary,  building,  trade  and  other  police  regulations  that 
might  be  promulgated  by  the  company,  and  pay  such 
taxes  as  might  be  levied. 

By  an  imperial  Ukase  of  July  20  (August  2)  1901 — 
originally  secret,  but  later  made  public  —  the  Russian 
Government  made  provision  for  the  establishment  and 
functioning  of  Russian  judicial  officials  within  "  the  line 
of  exploitation  of  the  Chinese  Eastern  Railway. '  *  These 
judicial  officers  were  to  have  jurisdiction  of  matters  aris- 


SPHERES  OF  INTEREST  209 

ing  in  the  line  of  exploitation  *  *  between  Russian  subjects 
exclusively,  and  particularly,  in  criminal  matters  where 
the  accused  and  injured  parties  are  Russians,  and  in  civil 
matters  where  both  sides,  plaintiff  and  defendant,  are 
Russian  subjects."*® 

Development  of  Russia's  Aggressive  Policies  in  Man- 
churia. During  1901  it  became  apparent  that  Russia  was 
not  only  unwilling  to  withdraw  from  Manchuria  the  troops 
which  she  had  sent  there  during  the  Boxer  troubles,  but 
that  she  was  bringing  strong  pressure,  likely  to  be  suc- 
cessful, upon  China  to  obtain  further  definitely  recog- 
nized rights  in  the  Eastern  Provinces.  And  it  is  known 
that  these  demands  China  was  enabled  or  induced  to 
resist  only  by  reason  of  the  energetic  diplomatic  repre- 
sentations made  by  the  other  Treaty  Powers.*^ 

In  December,  1901,  the  American  Government  was 

•** MacMurray,  Xo.  1896/5  (note).  By  agreements  entered  into  on  July 
5  (18),  1901,  with  the  authorities  of  the  Province  of  Kirin,  and  of  January 
1  (14),  1902,  with  the  authorities  of  the  Province  of  Heilungkiang. 
Kussia,  acting  through  the  Chinese  Eastern  Railway  Company,  laid  down 
elaborate  provisions  for  the  exercise  of  jurisdiction  over  Chinese  subjects 
within  the  railway  zone — in  the  main  through  a  so-called  Principal 
Bureau,  the  officials  of  which  should  be  appointed  by  the  Chinese  official 
(the  Chiang-Chun)  but  in  consultation  with  the  Engineer-in-Chief  of  the 
railway  company.    See  MacMurray,  Nos.  1901/2  and  1902/1. 

■"MacMurray  in  his  collection  of  treaties  (in  a  note  to  No.  1902/3)  gives 
the  text  of  a  Japanese  version  of  an  alleged  secret  treaty  between  China 
and  Russia  of  February,  1901,  which  appeared  in  Shina  Kankei  Tokushu 
Joyaku  Isan.  This,  says  MacMurray,  appears  to  be  a  translation  from  a 
Chinese  original  and  is  somewhat  obscure  in  its  phraseology  and  is  there- 
fore presented  "  with  all  reserves."  This  agreement  provided  that  Russia 
might  retain  her  railway  guards  in  Manchuria  \mtil  China  should  be  able 
to  restore  order  there  and  that  should  an  emergency  arise,  the  Russian 
troops  stationed  in  that  region  might  assist  the  Chinese  forces;  that  China 
should  not  employ  foreigners,  other  than  Russians,  as  military  or  naval 
advisors  in  the  provinces  of  northern  China,  nor,  without  the  consent  of 
Russia,  transfer  to  other  nations,  or  to  their  subjects,  mines  or  other  inter- 


300      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

informed  of  a  new  agreement  about  to  be  signed  between 
China  and  Russia  the  effect  of  which  would  be  greatly  to 
increase  Russian  and  decrease  Chinese  military  control 
in  Manchuria.  Furthermore,  the  agreement  provided 
that  troops  of  other  nations  should  not  be  sent  to  protect 
the  railways ;  and  no  further  railway  or  bridge  construc- 
tion in  southern  portions  of  Manchuria  was  to  be  allowed, 
or  railway  termini  changed  except  w^ith  Russia's  con- 
sent.^^ 

Protests  against  this  treaty  were  thereupon  made  by 
the  United  States,  and  similar  protests  filed  by  the  Brit- 
ish and  Japanese  Ministers.  The  United  States  Govern- 
ment directed  its  Minister  at  Peking  to  inform  Prince 
Regent  Ching  that  the  President  of  the  United  States 
^ '  trusts  and  expects  that  no  arrangement  which  will  per- 
manently impair  the  territorial  integrity  of  China  or 
injure  the  legitimate  interests  of  the  United  States,  or 
impair  the  ability  of  China  to  meet  her  international  obli- 
gations, will  be  made  with  any  single  Power. ' ' 

Again,  on  February  1,  1902,  the  following  strong  pro- 
test was  delivered  by  the  American  Government  to  the 
Chinese  authorities : 

The  Government  of  the  United  States  can  view  only  with  concern 
an  agreement  by  which  China  concedes  to  a  corporation  the  exclu- 
sive right  to  open  mines,  construct  railways,  or  other  industrial 
privilege;  that  such  monopoly  would  distinctly  contravene  treaties 
of  China  with  foreign  Powers,  affect  rights  of  citizens  of  the  United 
States  by  restricting  rightful  trade,  and  tend  to  diminish  her 
ability  to  meet  international  obligations;  that  other  Powers  will 
probably  seek  similar  exclusive  advantages  in  other  parts  of  the 

eats  in  Manchuria,  Mongolia,  or  Sinkiang,  or  construct  railways  in  those 
regions.  Except  in  Newchwang  there  were  to  be  granted  no  leases  or  grants 
to  subjects  of  other  Powers. 

«U.  8.  For.  ReU.,  1902,  p.  271. 


SPHERES  OF  INTEREST  301 

Chinese  Empire,  which  would  wreck  the  policy  of  absolutely  equal 
treatment  of  all  nations  in  regard  to  navigation  and  commerce  in 
the  Chinese  Empire;  and  that,  moreover,  for  one  Power  to  acquire 
exclusive  privileges  for  its  nationals  conflicts  with  assurances  re- 
peatedly given  to  the  Government  of  the  United  States  by  the 
Russian  Ministry  for  foreign  affairs  of  firm  intention  to  follow  the 
policy  of  the  open  door  in  China,  as  advocated  by  the  United  States 
and  accepted  by  all  the  Powers  having  commercial  interests  in 
China. 

Finally  on  March  26  (April  8)  1902,  an  agreement  was 
signed  between  China  and  Russia**  by  which  Russia 
agreed  "  to  the  re-establishment  of  the  authority  of  the 
Chinese  Government  in  that  region  [Manchuria],  which 
remains  an  integral  part  of  the  Chinese  Empire,  and 
restores  to  the  Chinese  Government  the  right  to  exercise 
therein  governmental  and  administrative  authority,  as  it 
existed  previous  to  the  occupation  by  Russian  troops  of 
that  region." 

With  the  qualification  ' '  provided  that  no  disturbances 
arise  and  that  the  action  of  other  Powers  should  not 
prevent  it,"  Russia  agreed  to  withdraw  her  troops  from 
Manchuria  within  eighteen  months. 

Other  sections  of  this  treaty  limited  the  right  of  China, 
pending  evacuation,  to  maintain  troops  in  Manchuria; 
and  provided  that  should,  in  course  of  time,  extensions  of 
the  Shanhaikuan-Newchwang-Sinmintung  railway  line  bo 
undertaken,  or  the  erection  of  a  bridge  in  Newchwang  or 
the  moving  of  the  terminus  there  be  contemplated,  the 
matters  should  be  discussed  between  the  two  Govern- 
ments. 

Anglo-Japanese  Alliance  of  1902.  Especially  by  Great 
Britain  and  Japan  had  the  development  of  Russian  influ- 

«•  MacMurray,  No.  1902/3. 


302      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

ence  in  the  Far  East  been  watched  with  anxiety.  Joined 
to  Russia's  advance  in  Manchuria  had  been  her  attempts 
to  increase  her  influence  and  control  in  Korea.  The  result 
of  this  anxiety  upon  the  part  of  these  two  nations  re- 
sulted in  the  signing  of  a  formal  treaty  of  military  alli- 
ance between  them.  In  this  treaty  it  was  declared  that 
Great  Britain  had  special  interests  in  China,  and  that 
Japan,  in  addition  to  those  interests  which  she  had  in 
China,  was  politically  as  well  as  commercially  and  indus- 
trially interested  in  Korea.  Therefore,  the  alliance  de- 
clared, "  the  High  Contracting  Parties  recognize  that  it 
will  be  admissible  for  either  of  them  to  take  such  meas- 
ures as  may  be  indispensable  in  order  to  safeguard  those 
interests  if  threatened  either  by  aggressive  action  of  any 
other  Power,  or  by  disturbances  arising  in  China  or 
Korea  and  necessitating  the  intervention  of  either  of  the 
High  Contracting  Parties  for  the  protection  of  the  lives 
and  property  of  its  subjects."  ** 

Japan  Declares  War  on  Russia.  Russia  having  failed 
to  carry  out  her  agreement  for  the  evacuation  of  Man- 
churia, Japan,  on  July  28,  1903  submitted  to  Russia  a 
note  of  protest  in  which  she  said : 

The  recent  conduct  of  Eussia  has  been,  at  Peking,  to  propose 
new  demands,  and,  in  Manchuria,  to  tighten  her  hold  upon  it,  until 
the  Imperial  Government  is  led  to  believe  that  Eussia  must  have 
abandoned  the  intention  of  retiring  from  Manchuria.  At  the  same 
time,  her  increased  activity  upon  the  Korean  frontier  is  such  as  to 
raise  doubts  as  to  the  limits  of  her  ambition. 

The  unconditioned  and  permanent  occupation  of  Manchuria  by 
Eussia  would  create  a  state  of  things  prejudicial  to  the  security  and 

**  The  Anglo-Japanese  Alliances  will  receive  further  consideration  in  con- 
nection with  the  account  of  the  development  of  Japanese  interests  in  Man- 
churia.    Poat,  p.  329. 


SPHERES  OF  INTEREST  303 

interest  of   Japan.     The   Principle  of  equal  opportunity  would 
thereby  be  annulled,  and  the  territorial  integrity  of  China  impaired. 

In  prolonged  negotiations  Japan  was  unable  to  obtain 
satisfactory  action  upon  the  part  of  Russia,  and,  on  Feb- 
ruary 5,  1904,  sent  a  final  note  to  the  Bussian  Govern- 
ment in  which  she  declared: 

The  Government  of  His  Majesty  the  Emperor  of  Japan  regards 
the  independence  and  territorial  integrity  of  Korea  as  essential  to 
the  repose  and  safety  of  their  own  country.  .  .  .  The  obstinate 
refusals  of  Russia  to  enter  into  an  engagement  to  respect  China's 
territorial  integrity  in  Manchuria,  which  is  seriously  menaced  by 
the  continued  occupation  of  the  province,  notwithstanding  Russia's 
treaty  engagements  with  China  and  her  repeated  assurance  to  other 
Powers  possessing  interests  in  those  regions — have  made  it  neces- 
sary for  the  Imperial  Government  to  consider  what  measures  of 
self-defense  they  are  called  upon  to  take. 

On  February  17,  the  Japanese  Government,  in  reply  to 
a  Chinese  declaration  of  four  days  earlier,  declared : 

Japan's  hostilities  against  Russia  having  been  actuated,  not  by  a 
desire  for  conquest,  but  solely  by  the  necessity  of  defending  her  just 
rights  and  interests,  the  Imperial  Government  have  not  the  slightest 
intention  of  acquiring  territory  as  a  result  of  the  war,  at  the  expense 
of  China.  It  is  also  desired  that  the  Chinese  Government  will 
clearly  understand  that  the  measures  to  be  taken  in  the  field  of 
action  within  the  Chinese  territory,  arising  as  they  will  purely  from 
military  necessities,  will  not  be  of  a  nature  to  infringe  the  sovereign 
rights  of  the  Chinese  Empire. 

Portsmouth  Treaty  of  Peace.  By  the  Portsmouth  Treaty 
of  Peace  of  September  5,  1905,*^  which  concluded  the 
Eusso-Japanese  War,  Russia  and  Japan  mutually  en- 
gaged, by  Article  m : 

*MacMurray,  Xo.  1905/8. 


304      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

1.  To  evacuate  completely  and  simultaneously  Manchuria  ex 
cept  the  territory  affected  by  the  lease  of  the  Liaotung  Peninsula/"'' 

2.  To  restore  entirely  and  completely  to  the  exclusive  adminis- 
tration of  China  all  portions  of  Manchuria  now  in  the  occupation 
or  under  the  control  of  the  Japanese  or  Russian  troops,  with  the 
exception  of  the  territory  above  mentioned  [Liaotung  Peninsula]. 

The  Imperial  Government  of  Russia  declare  that  they  have  not 
in  Manchuria  any  territorial  advantages  or  preferential  or  exclusive 
concessions  in  impairment  of  Chinese  sovereignty  or  inconsistent 
with  the  principle  of  equal  opportunity. 

Furthermore,  by  Article  IV,  Japan  and  Russia  reci- 
procally engaged  * '  not  to  obstruct  any  general  measures 
common  to  all  countries,  which  China  may  take  for  the 
development  of  the  commerce  and  industry  of  Man- 
churia. ' ' 

By  Article  V,  Russia  transferred  and  assigned  to  Ja- 
pan, with  the  consent  of  China,  which  consent  both  coun- 
tries mutually  engaged  themselves  to  obtain,  the  Lease  of 
the  Liaotung  Peninsula  and  all  appertaining  privileges 
and  concessions  and  public  works  and  properties. 

By  Article  VI  Russia  engaged  to  transfer  and  assign 
to  Japan,  with  China's  consent  to  be  obtained,  "  the  rail- 
way between  Chang-chun  (Kuang-cheng-tzu)  and  Port 
Arthur,  and  all  its  branches,  together  with  all  rights, 
privileges  and  properties  appertaining  thereto  in  that 
region,  as  well  as  coal  mines  in  the  said  region  belonging 
to  or  worked  for  the  benefit  of  the  railway." 

By  Article  VII  Japan  and  Russia  engaged  *'  to  exploit 
their  respective  railways  in  Manchuria  exclusively  for 

*■  By  an  annexed  agreement  it  was  provided  that  both  partie8  reservcfl 
1o  themselves  "the  right  to  maintain  guards  to  protect  their  respective 
railway  lines  in  Manchuria."  The  number  of  such  guards  was  not  to 
ejcceed  15  per  kilom.  and  to  be  as  small  as  possible  having  in  view  the 
actual  requirements. 


SPHEKES  OP  INTEREST  305 

eommercial  and  industrial  purposes  and  in  no  wise  for 
strategic  purposes.  It  is  understood  that  that  restriction 
does  not  apply  to  the  railway  in  the  territory  affected  by 
tiie  lease  of  the  Liaotung  Peninsula.*' 

From  the  time  of  the  Portsmouth  Treaty  Bussia's 
sphere  of  interest  was  confined  to  the  northern  part  of 
Manchuria,  her  former  position  in  the  southern  part 
being  taken  by  Japan.  As  will  presently  appear,  it  was 
not  long  before  Japan  and  Kussia  found  themselves 
working  co-operatively  in  Manchuria,  as  vis  a  vis  China 
and  the  other  Powers,  for  it  was  to  the  advantage  of 
both  that  they  should  give  as  broad  a  practical  applica- 
tion as  possible  to  the  rights  which  they  possessed  in 
their  respective  parts  of  Manchuria, — in  other  words, 
each  should  support  the  other's  latitudinarian  claims. 
This  chapter  in  the  development  of  the  Manchurian  situ- 
ation will  be  dealt  with  in  the  account  of  Japan's  special 
interests  in  China. 

Russian  Political  Jurisdiction  in  North  Manchuria  since 
1905.  As  has  been  already  noted,  Russia  asserted  a  right 
within  the  zone  of  the  Chinese  Eastern  Railway,  and 
including  towns  and  cities  on  that  line — especially  in 
Harbin — to  exercise  what  amounted  to  a  political  juris- 
diction not  only  over  her  own  subjects  and  the  Chinese 
but  over  the  nationals  of  the  other  Treaty  Powers. 

In  1909  (April  27-May  10)  Russia  and  China  entered 
into  a  preliminary  agreement*'''  concerning  the  exercise 
by  the  former  of  administrative  powers  on  the  railway 
lands,  according  to  which  the  sovereign  rights  of  China 
on  the  lands  of  the  Railway  Company  were  recognized 
"  as  a  matter  of  fundamental  principle,"  and  that  they 

'' MacJIurray,  No.  1914/14  (note). 
20 


306      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

should  not  be  prejudiced  in  any  way ;  but  that  municipal 
bodies  might  be  established  in  the  commercial  centers  of 
a  certain  importance  situated  on  the  lands  of  the  railway ; 
thai  the  inhabitants  of  these  centers,  according  to  the 
importance  of  the  localities  and  the  number  of  the  resi- 
dents, might  elect  delegates  who  should  chose  an  Execu- 
tive Committee,  or  the  residents  themselves  might  take 
part  in  the  business  of  the  municipality  and  a  representa- 
tive be  elected  from  amongst  them  to  take  upon  himself 
the  function  of  carrying  out  the  resolutions  decided  upon 
at  meetings  of  all  the  residents.  In  these  respects  no 
distinctions  were  to  be  made  between  the  Chinese  popu- 
lation and  the  nationals  of  the  Powers.  The  right  to 
vote  was  to  be  dependent  upon  the  ownership  of  real 
estate  of  a  j&xed  value  or  the  payment  of  a  fixed  annual 
rental  and  taxes.  The  assembly  of  delegates  was  to  have 
authority  to  deal  with  all  local  matters  of  public  utility. 
These  general  arrangements,  it  was  declared,  should  serve 
as  a  basis  for  determining  detailed  regulations  in  regard 
to  the  municipalities  and  police,  and  the  scale  of  taxes  to 
be  assessed. 

To  this  agreement  the  Governments  of  the  various 
Treaty  Powers  refused  their  approval. 

In  1908  (April  9)  the  American  Secretary  of  State, 
with  reference  to  the  matter  of  the  Russian  administra- 
tion at  Harbin,  had  written: 

The  grant  by  the  instrument  of  September  8,  1896,  to  the  rail- 
road company  of  a  right  of  railroad  administration  over  its  own 
lands  could  not,  even  if  standing  alone,  be  deemed  to  carry  a  right 
of  political  administration  which  would  amount  to  a  transfer  of 
sovereign  rights;  but  the  same  instrument,  by  the  French  as  well 
as  by  the  Chinese  text,  contains  also  an  express  provision  reserving 
the  pohtical  jurisdiction  over  these  lands  to  the  Government  of 


SPHEEES  OF  INTEREST  307 

China.  This  view  appears  to  agree  entirely  with  that  expressed  by 
the  Government  of  Russia  in  the  declaration  of  the  treaty  of  Ports- 
mouth— that  Russia  has  no  territorial  advantages  or  preferential 
or  exclusive  concessions  in  Manchuria  of  such  a  nature  as  to  impair 
the  sovereignty  of  China  or  which  are  incompatible  with  the  prin- 
ciple of  equal  opportunity. 

Again,  in  a  note  of  November  6,  1909,  the  American 
Secretary  said: 

The  administration  by  the  railway  company  of  its  leased  lands 
provided  for  in  Article  VI  of  the  contract  can  refer  only  to  such 
Dusiness  administration  as  may  be  necessary  to  the  "  construction, 
exploitation  and  protection  "  of  the  railway,  these  being  the  objects 
expressly  mentioned  in  the  article  for  which  these  lands  wer^i 
granted  by  China. 

This  was,  without  doubt,  the  understanding  of  China  as  evi- 
denced by  the  Chinese  translation  of  Article  VI  and  by  the  protest 
of  the  Chinese  Government  against  the  attempts  by  the  railway 
company  to  administer  the  municipal  Government  at  Harbin. 

Adverting  to  the  French  text  of  the  contract,  it  is  to  be  observed 
that  the  land  which  is  the  subject  of  the  provisions  of  Article  VI 
thereof  is  precisely : 

"  Les  terrains  reelement  necessaires  pour  la  construction,  exploi- 
tation et  protection  de  la  ligne,  ainsique  les  terrains  aux  environs 
de  le  ligne,  necessaires  pour  se  procurer  des  sables,  pierres,  chaux, 
etc" 

The  second  paragraph  of  Article  VI  reads: 

"  La  Societe  aura  le  droit  absolu  et  exclusif  de  V administration 
de  ses  terrains." 

As  to  the  meaning  of  the  word  "  administration,''  it  seems  very 
worthy  of  remark  that  in  English  the  word  "  administration  "  is 
quite  commonly  used  of  all  sorts  of  business  administration,  while 
the  same  word  in  French  and  the  equivalent  word  in  the  Chinese 
version  of  the  contract  are  still  more  commonly  used  of  business 
and  non-governmental  administration.  Indeed,  the  French  word 
'*  administration  "  is  so  very  commonly  used  of  business  manage- 
ment that  its  absolute  meaning  in  a  given  case  would  be  wholly 
determined  by  the  context. 


3t$      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

A  reading  of  the  whole  contract  deprives  the  second  paragrapU 
ef  Article  VI  of  all  semblance  of  referring  to  a  political  adminis- 
Iration.** 

In  a  circular  note  of  December  4,  1909,  the  Chinese 
Government  absolutely  repudiated  the  contention  that  it 
had  surrendered  any  right  of  sovereignty  or  political 
jurisdiction  to  the  Chinese  Eastern  Railway  Company 
with  regard  to  its  railway  zone."** 

In  February,  1914,  the  Russian  Government  asked  of 
the  French  Government  that  it  recognize  an  obligation 
on  the  part  of  its  nationals  to  observe  the  municipal  regu- 
lations and  to  pay  the  municipal  taxes  levied  in  the  towns 
within  the  lands  of  the  Chinese  Eastern  Railway.  To 
this  request  an  assent  was  given. 

On  December  3,  1914,  Great  Britain  entered  into  an 
agreement  with  Russia  "^  with  regard  to  the  control  which 
might  be  exercised  over  British  subjects  within  the  rail- 
way zone,  the  more  important  provisions  of  Avhich  were 
as  follows: 

The  Russian  Government  declared  that  all  taxes  and 
dues  collected  in  the  Railway  Settlement  at  Harbin  and 
at  other  Settlements  along  the  road  should  be  exclusively 
devoted  to  municipal  and  public  purposes  for  the  common 
benefit  of  all  the  inhabitants  of  those  places.  This  being 
understood,  the  British  Government  agreed  to  the  pay- 
ment by  its  subjects  within  these  areas  of  the  same  dues 
as  those  levied  on  Russian  subjects,  and  further  that  the 
observance  of  the  local  regulations — of  which  a  text  is 
annexed — might  be  made  obligatory,  provided  there  wer(^ 
no  conflict  with  the  extraterritorial   rights  of  British 

*  U.  8.  For.  Rcls.,  1910,  p.  219.      •  U.  S.  For.  Rcls.,   1910,  p.  222. 
••  Mac-Murray,  No.  1914/14. 


SPHEKES  OF  INTEREST  309 

subjects.  Article  V  of  this  agreement  further  declared 
that  the  police  authorities  in  Harbin  and  other  Settle- 
ments within  the  area  of  the  railway  should  give  prompt 
effect  to  any  requests  preferred  by  the  British  resident 
consul  for  the  adoption  of  coercive  measures  against 
British  subjects,  but  that  such  police  officials  should  not, 
on  their  own  initiative  take  any  coercive  action  against 
British  subjects  except  in  cases  involving  a  breach  of  the 
peace. 

To  this  Anglo-Russian  arrangement  the  Governments 
of  the  Netherlands,  Belgium,  Spain,  France,  Denmark, 
Italy  and  Japan  have  given  their  assent.  The  United 
States  has  continued  to  insist  that  the  payment  of  taxes 
by  American  citizens  is  to  be  deemed  voluntary  on  their 
part,  and  is  to  be  made  through  the  American  consul,  and 
furthermore,  that  when  arrests  of  Americans  are  contem- 
plated the  Russian  authorities  shall  notify  the  American 
consul :  that  only  in  cases  of  flagrante  delicto  may  arrests 
be  made  without  this  notification. 

Similar  Question  Raised  by  Japanese  at  Mukden.     In 

this  connection  it  may  also  be  noted  that  the  Japanese  are 
now  raising  at  Mukden  a  question  substantially  similar 
to  the  one  the  Russians  have  raised  at  Harbin.  This 
they  are  doing  by  attempting  to  levy  and  collect  from 
foreigners  an  income  tax.  The  only  important  difference 
between  the  two  cases  is  that  the  Japanese  Government 
is  acting  through  the  South  Manchuria  Railway,  where- 
as at  Harbin  the  Chinese  Eastern  Railway  administration 
was  involved. 


CHAPTER  XI 

The  Japanese  in  Manchubia 


Until  1905  it  is  probable  that  Japan  had  formed  no 
deliberate  plan  to  obtain  for  herself  a  special  and  perma- 
nent position  in  South  Manchuria.  In  that  year,  indeed, 
was  drawn  up  the  Ito-Harriman  agreement  for  the  lease 
and  operation  with  American  capital  of  the  South  Man- 
churia Railway  which  Japan  had  obtained  from  Russia.^ 
This  agreement,  to  whose  terms  the  consent  of  China  was 
to  be  obtained,  was  in  full  consonance  with  the  provisions 
of  the  Portsmouth  treaty.  With  the  return,  however,  of 
Komura  to  Japan  from  Portsmouth,  opposition  to  the 
Ito-Harriman  agreement  immediately  developed,  and  Mr. 
Harriman  was  informed  that  the  matter  would  have  to  be 
held  in  abeyance ;  and,  before  long,  the  plan  was  definitely 
abandoned.  And  events  soon  showed  that  Japan  had 
ambitions  in  Manchuria  which  did  not  appear  upon  the 
face  of  the  Portsmouth  Treaty  and  were,  indeed,  in  con- 
flict with  its  provisions. 

Upon  their  face  these  provisions  of  the  Portsmouth 
Treaty  secured  to  China  her  continued  sovereignty  over 
and  administrative  control  of  Manchuria,  and  satisfied, 
so  far  as  the  other  Treaty  Powers  were  concerned,  the 
requirements  of  the  Open  Door  policy.  In  short,  upon 
these  points  the  only  change  brought  about  by  the  treaty 

*  Mr.  Harriman  was  at  the  time  confident  that  he  would  be  able  to  obtain 
the  consent  of  the  Russian  Government  to  the  sale  of  the  Chinese  Eastern 
Railway,  that  is,  of  the  Russian  railways  in  Manchtiria. 

310 


THE  JAPANESE  IN  MANCHURIA  311 

was  the  substitution  of  Japan  for  Russia  as  regards  rail- 
way and  other  rights  in  South  Manchuria,  and  the  trans- 
fer of  the  lease  of  the  Liaotung  Peninsula  from  Bussia 
to  Japan. 

It  very  soon  appeared,  however,  that  Japan  was  not  to 
remain  content  with  the  Russian  rights  as  thus  publicly 
defined,  and  that,  in  fact,  at  the  time  of  signing  the  treaty, 
she  had  been  informed  by  Russia  of  the  latter 's  rights 
in  Manchuria  under  secret  agreements  with  China,  and 
which  were  not  shown  to  the  other  Powers  at  the  time  the 
Portsmouth  Treaty  was  signed — rights  which  Japan  soon 
brought  forward  to  sustain  her  claims  to  *'  absolute 
and  exclusive  right  of  administration  in  the  territories 
attached  to  the  railway." 

Japan  also  alleged  that,  by  a  secret  clause  of  an  agree- 
ment entered  into  in  1905  between  Yuan  Shih-K'ai  and 
Komura,  she  had  obtained  a  right  to  object  to  the  con- 
struction of  any  railway  in  Manchuria  paralleling  and 
competing  with  the  existing  South  Manchuria  Railway. - 

Sino-Japanese  Treaty  of  December  22,  1905.      By  the 

agreement  of  December  22,  1905,^  between  China  and 
Japan,  China  gave  her  consent  **  to  all  the  transfers  and 
assignments  made  by  Russia  to  Japan  in  Articles  V  and 
VI  "  of  the  Portsmouth  Treaty;  and  by  an  "  additional 
agreement  '*  of  the  same  date,  that,  as  soon  as  the  Japan- 
ese and  Russian  military  forces  were  withdrawn,  sixteen 
specified  places  in  Manchuria  should  be  opened  as  places 
of  international  residence  and  trade.  Japan  also  obtained 


*  See  post,  in  re  the  Hsinmintuni'Fakumen  and  the  Chinchow-Aigun  rail- 
ways projects. 

'MacMurray,  No.  1905/18,  and  note  thereto. 


312      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

*  *  concessions  "  or  '  *  settlements  ' '  at  Yingkow,  Antung, 
and  Mukden.  Japan  on  her  part  agreed  that  she  wonld 
withdraw  her  railway  guards  simultaneously  with  Russia 
as  soon  as  tranquility  should  have  been  re-established  in 
Manchuria,  and  China  * '  have  become  herself  capable  of 
affording  full  protection  to  the  lives  and  property  of 
foreigners. ' ' 

Antung-Mukden  Railway.  By  Article  VI  of  this  addi- 
tional agreement  China  further  gave  to  Japan  the  right 
"  to  maintain  and  work  the  military  railway  line  con- 
structed [during  the  Russo-Japanese  War]  between 
Antung  and  Mukden  and  to  improve  said  line  so  as  to 
make  it  fit  for  the  conveyance  of  commercial  and  indus- 
trial goods  of  all  nations. ' '  * 

With  regard  to  this  line,  Article  VI,  however,  went  on 
to  provide  that  the  concession  should  expire  in  the  forty- 
ninth  year  of  Kuang  Hsii  (1923-1924),  at  which  time, 
"  the  said  railway  shall  be  sold  to  China  at  a  price  to  be 
determined  by  appraisement  of  all  its  properties  by  a 
foreign  expert  who  will  be  selected  by  both  parties." 

Article  X  of  the  agreement  made  provision  for  the 
establishment  of  a  joint  stock  company  of  forestry  com- 
posed of  Japanese  and  Chinese  capitalists  for  the 
exploitation  of  the  forests  on  the  right  bank  of  the  River 
Yalu — the  Japanese  and  Chinese  shareholders  to  share 
equally  in  the  profits  of  the  undertaking. 

Secret  Protocols  to  the  Treaty  of  1905.  Attached,  how- 
ever, to  the  agreement  of  December  22,  1905,  were  a 

*  In  other  words  to  build  and  maintain  a  permanent  standard  railway 
line  between  these  two  points,  thus  enabling  Japan  to  link  up  her  Korean 
lines  at  Mukden  with  the  South  Manchuria  system. 


THE  JAPANESE  IN   MANCHUKIA 

number  of  secret  protocols,  a  summary  of  which,  in  the 
following  February,  was  made  public.  These  protocols 
provided,  inter  alia,  as  follows: 

That  the  railway  between  Changchun  and  Earin  should  be  con- 
structed by  China  with  capital  raised  by  herself,  one-half,  however, 
to  be  borrowed  from  Japan. 

That  the  military  railway  constructed  by  Japan  between  Mukden 
and  Hsinmintun  should  be  sold  to  China,  who  agreed  to  reconstruct 
it,  making  it  her  own  railway:  all  other  military  railways  to  be 
removed. 

That  (and  this  was  soon  seen  to  be  a  very  important  matter) 
the  Chinese  Government  engage,  for  the  purpose  of  protecting  the 
interest  of  the  South  Manchuria  Railway,  not  to  construct,  prior 
to  the  recovery  by  them  of  the  said  railway,  any  main  line  in  the 
neighborhood  of  and  parallel  to  that  railway,  or  any  branch  line 
which  might  be  prejudicial  to  the  interest  of  the  above  mentioned 
railway.' 

Hsinmintun-Fakumen  Railway.  The  undertaking  thus 
obtained  from  China,  Japan  used  in  order  to  prevent  the 
construction  by  a  British  firm  and  with  British  money  of 
an  extension  of  the  North  China  Railway  from  Hsinmin- 

'  RockhiU,  after  giving  the  foregoing  summary  of  secret  protocols  to  the 
Treaty  of  December  22,  1905,  adds  the  following  note  (p.  140)  : 

"In  regard  to  the  foregoing,  see  No.  1-B  (?)  Information  Series,  Far 
East  jbeing  a  memorandum  of  a  conversation  of  January  28,  1908,  in  the 
course  of  which  Tang-Shao-i,  Governor  of  the  Province  of  Fengtien,  who 
signed  the  Peking  Agreement,  categorically  denied  the  existence  of  any 
clause  debarring  China  from  paralleling  the  South  Manchurian  Kailroad. 
Tang  Shao-i  further  gave  distinct  assurance  that  there  was  no  secret  agree- 
ment between  Japan  and  China  and  that  all  the  Legations  had  been 
apprised  of  this  fact  upon  the  conclusion  of  the  Komura  negotiations. 
Tang  Shao-i  intimated  that  an  agreement  that  China  should  not  parallel 
the  Japanese  railroad  had  been  sought  and  discussed,  but  not  made,  and 
implied  that  such  discussion  appeared  in  the  signed  minutes  of  the  confer- 
ence, the  inference  being  that  there  was  absolutely  no  agreement  but  simply 
evidence  of  a  discussion  of  this  subject." 


314      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

tun  to  Fakumen,  although  it  was  clear  that  the  obtaining 
of  this  undertaking  as  well  as  the  action  taken  under  it 
was  in  clear  violation  of  the  provisions  of  the  Portsmouth 
Treaty  that  **  Japan  and  Eussia  reciprocally  engage  not 
to  obstruct  any  general  measures  common  to  all  countries, 
which  China  may  take  for  the  development  of  the  com- 
merce and  industry  of  Manchuria. ' ' 

It  follows  (says  Hornbeck),  that  a  secret  treaty  provision  in 
which  China  undertook,  upon  Japan's  demand,  "  not  to  construct 
any  railway  hues  parallel  to  and  competing  with  the  South  Man- 
churian  Railway  "  amounted  to  the  establishment  in  Japan's  favor 
of  a  new  and  special  privilege.  This  diminished  China's  freedom 
of  action;  it  was  therefore  an  immediate  violation  of  the  pledge 
made  to  Russia;  it  was  contrary  to  principles  set  forth  in  the 
Anglo-Japanese  agreement  of  1905;  and  it  carried  the  implication 
of  an  intention  to  close  the  door  in  South  Manchuria  against  rail- 
way enterprise  in  other  than  Japanese  hands.^ 

Notwithstanding  the  objections  that  might  have  been 
made  to  Japan's  position  in  the  Hsinmintun-Fakumen 
Railway  matter,  the  British  Government,  for  political 
reasons  which  may  be  understood,  was  unwilling  to  sup- 
port the  British  interests  which  had  obtained  the  contract 
for  the  financing  and  building  of  the  road,  and  the  project 
had  to  be  abandoned. 

Russo-Japanese  Agreement  of  1907.  By  a  convention 
signed  July  30,  1907,*^  it  was  made  evident  that  Japan 
and  Russia  had  decided  to  co-operate  in  Manchuria,  each 
to  support  the  other  within  its  respective  sphere.  The 
essential  parts  of  this  agreement  were  as  follows: 

'Contemporary  Politics  in  the  Far  East,  p.  259. 
'  MacMurray,  No.  1907/11. 


THE  JAPANESE  IN  MANCHURIA  315 

Akticle  I.  Each  of  the  High  Contracting  Parties  engages  to 
respect  the  actual  territorial  integrity  of  the  other,  and  all  the 
rights  accruing  to  one  and  the  other  Party  from  treaties,  conven- 
tions and  contracts  in  force  between  them  and  China,  copies  of 
which  have  been  exchanged  between  the  Contracting  Parties  (in  so 
far  as  these  rights  are  not  incompatible  with  the  principle  of  equal 
opportunity),  from  the  Treaty  signed  at  Portsmouth  on  the  5th 
day  of  September  (23rd  of  August),  1905,  as  well  as  from  the 
special  conventions  concluded  between  Japan  and  Russia. 

Article  II.  The  two  High  Contracting  Parties  recognize  the 
independence  and  the  territorial  integrity  of  the  Empire  of  China 
and  the  principle  of  equal  opportunity  in  whatever  concerns  the 
commerce  and  industry  of  all  nations  in  that  Empire,  and  engage 
to  sustain  and  defend  the  maintenance  of  the  status  quo  and  respect 
for  this  principle  by  all  the  pacific  means  within  their  reach. 

Franco-Japanese  Understanding  of  1907.  By  an  agree- 
ment signed  with  France,  June  10, 1907,^  the  two  govern- 
ments mutually  agreed : 

To  respect  the  independence  and  integrity  of  China,  as  well  as 
the  principle  of  equal  treatment  in  that  country  for  the  commerce 
and  subjects  or  citizens  of  all  nations,  and  having  a  special  interest 
to  have  the  order  and  pacific  state  of  things  preserved  especially  in 
the  regions  of  the  Chinese  Empire  adjacent  to  the  territories  where 
they  have  the  rights  of  sovereignty,  protection  or  occupation, 
engage  to  support  each  other  for  assuring  the  peace  and  security 
in  those  regions,  with  a  view  to  maintain  the  respective  situation 
and  the  territorial  rights  of  the  two  High  Contracting  Parties  in 
the  Continent  of  Asia. 

Root-Takahira  Understanding  of  1908.  November  30, 
1908,  the  Root-Takahira  understanding  with  the  United 
States  was  obtained  by  Japan  and  embodied  in  an 
exchange  of  notes.®    In  these  notes  it  was  declared : 

» MacMurray,  No.  1907/7.  •  MacMurray,  No.  1908/19. 


31fi      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

1.  It  is  the  wish  of  the  two  governments  to  encourage  the  free 
and  peaceful  development  of  their  commerce  in  the  Pacific  Ocean. 

2.  The  policy  of  both  governments,  uninfluenced  by  any  aggres- 
sive tendencies,  is  directed  to  the  maintenance  of  the  existing 
status  quo  in  the  region  above  mentioned  and  to  the  defense  of  the 
principle  of  equal  opportunity  for  commerce  and  industry  in  China. 

3.  They  are  accordingly  firmly  resolved  reciprocally  to  respect 
the  territorial  possessions  belonging  to  each  other  in  said  region. 

4.  They  are  also  determined  to  preserve  the  common  interest  of 
all  Powers  in  China  by  supporting  by  all  pacific  means  at  their 
disposal  the  independence  and  integrity  of  China  and  the  principle 
of  equal  opportunity  for  commerce  and  industry  of  all  nations  in 
that  Empire. 

5.  Should  any  event  occur  threatening  the  status  quo  as  above 
described  or  the  principle  of  equal  opportunity  as  above  defined,  it 
remains  for  the  two  governments  to  communicate  with  each  other 
in  order  to  arrive  at  an  understanding  as  to  what  measures  they 
may  consider  it  useful  to  take. 

No  doubt  there  were  then  political  considerations  which 
justified  this  statement  of  the  attitude  of  the  two  Powers, 
and  only  good  could  be  expected  from  the  explicit  re- 
affirmance  *'  of  the  principle  of  equal  opportunity  for 
commerce  and  industry  in  China,"  and  the  repudiation 
of  **  any  aggressive  tendencies,"  and  the  support  **  by 
all  pacific  means  at  their  disposal  [of]  the  independence 
and  integrity  of  China."  The  unsatisfactory  element  in 
this  joint  pronouncement  was  the  recognition  by  the 
United  States  of  the  * '  existing  status  quo  '  *  in  the  Pacific 
which,  without  definition,  could  easily  be  construed  as  an 
acceptance  by  the  United  States  of  claims  of  right 
implicit  in  various  acts  of  Japan  in  Manchuria  since  the 
Portsmouth  Treaty. 

Secretary  Knox's  Plan  to  "  Neutralize  "  the  Railways  in 
Manchuria.     The  issue  as  to  the  extent  of  the  rights  of 


THE   JAPANESE  IN   MANCHURIA  317 

Japan  in  South  Manchuria  was  again  raised  in  1909  when 
the  British  interests  which  had  been  concerned  with  the 
Hsinmintun-Fakumen  project  joined  with  a  group  of 
American  banking  interests  in  a  plan  to  obtain  from 
China  the  right  to  construct  a  railway  from  Chinchou  to 
Aigun  on  the  northern  border  of  Manchuria.  The  pre- 
liminary agreement  ^'^  providing  for  the  construction  of 
this  road  was  ratified  by  an  Imperial  Edict  in  January, 
1910.  This  matter  became  the  basis  of  the  plan  of  the 
American  Secretary  of  State  Knox,  to  bring  about  a 
* '  neutralization  * '  of  all  the  railways  of  Manchuria,  for 
it  was  this  concession  which  America  proposed  to  con- 
tribute as  its  share  in  the  scheme.  Therefore,  before 
speaking  of  the  final  outcome  of  the  Chinchow- Aigun 
project,  it  will  be  necessary  first  to  consider  Secretary 
Knox's  plan,  and  the  reception  which  it  met. 

It  will  be  remembered  that  under  her  various  treaties 
and  agreements  China  had  reserved  the  right  to  buy, 
after  a  certain  period,  the  railways  in  Manchuria.  Secre- 
tary Knox's  plan  was  to  obtain  the  agreement  of  the 
Powers  concerned  that  this  date  might  be  anticipated  and 
to  loan  to  China  the  purchase  money,  and,  after  the  sale 
was  effected,  and  the  railways  had  become  the  property 
of  the  Chinese  Government,  to  have  them,  for  a  time  at 
least,  administered  under  a  joint  international  commis- 
sion. 

This  plan  Secretary  Knox  first  submitted  to  the  British 
Government  for  its  consideration  in  a  memorandum 
dated  November  9,  1909,  sent  to  the  American  Ambas- 
sador at  London  and  by  him  to  be  forwarded  to  the 
British  Foreign  Office.^* 

*•  For  text  of  this  agreement,  see  MacMurray,  No.  1909/12. 

"  U.  S.  For.  Rels.,  1909,  p.  211.     See  also  V.  8.  For.  Rels.,  1910,  p.  234. 


318      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  this  memorandum,  after  calling  attention  to  the  fact 
that  the  Chinese  Government  had  signed  and  ratified  by 
an  unpublished  imperial  decree  an  agreement  by  which 
American  and  British  interests  were  authorized  to 
co-operate  in  the  financing  and  construction  of  the 
Chinchow-Tsitsihar  Railroad,  the  American  Secretary 
went  on  to  say  that  the  Government  of  the  United  States 
was  disposed  to  favor  the  ultimate  participation  in  this 
project  of  such  other  Powers  as  might  be  agreeable  to 
China,  and  who  were  known  to  support  the  principle  of 
equality  of  commercial  opportunity  and  the  maintenance 
of  the  integrity  of  the  Chinese  Empire.  However,  before 
this  arrangement  would  be  further  elaborated,  the 
Government  of  the  United  States  asked  that  the  British 
Government  should  give  its  consideration  to  the  following 
scheme : 

Perhaps  the  most  effective  way  to  preserve  the  undisturbed  enjoy- 
ment by  China  of  all  political  rights  in  Manchuria  and  to  promote 
the  development  of  those  Provinces  under  a  practical  application 
of  the  policy  of  the  open  door  and  equal  commercial  opportunity 
would  be  to  bring  the  Manchurian  highways  and  the  railroad  under 
an  economic  and  scientific  and  impartial  administration  by  some 
plan  vesting  in  China  the  ownership  of  the  railroads  through  funds 
furnished  for  that  purpose  by  the  interested  Powers  willing  to 
participate.  Such  loan  should  be  for  a  period  ample  to  make  it 
reasonably  certain  that  it  could  be  met  within  the  time  fixed  and 
should  be  upon  such  terms  as  would  make  it  attractive  to  bankers 
and  investors.  The  plan  should  provide  that  nationals  of  the 
participating  Powers  should  supervise  the  railroad  system  during 
the  terms  of  the  loan,  and  the  Governments  concerned  should  enjoy 
for  such  period  the  usual  preferences  for  their  nationals  and  mate- 
rials upon  an  equitable  basis  inter  se. 

The  advantages  of  such  a  plan  to  Japan  and  Russia  (the  Memo- 
randum went  on  to  state)  are  obvious.    Both  those  Powers,  desiring 


THE   JAPANESE  IN   MANCHURIA  319 

in  good  faith  to  protect  the  policy  of  the  open  door  and  equal  oppor- 
tunity in  Manchuria,  and  wishing  to  assure  to  China  unimpaired 
sovereignty,  might  well  be  expected  to  welcome  an  opportunity  to 
shift  the  separate  duties,  responsibilities,  and  expenses  they  have 
undertaken  in  the  protection  of  their  respective  commercial  and 
other  interests  for  impartial  assumption  by  the  combined  Powers, 
including  themselves,  in  proportion  to  their  interests. 

In  a  statement  given  to  the  press  on  January  6,  1910, 
the  American  Secretary  of  State  reviewed  recent 
attempts  upon  the  part  of  the  United  States  to  partici- 
pate in  the  financing  of  Chinese  railway  projects,  and 
pointed  out  that  the  plan  for  the  neutralization  of  the 
Manchurian  railways  was  but  part  of,  and  served  to  indi- 
cate the  end  toward  which,  the  American  policy  in  China 
was  directed. 

Reply  of  Great  Britain.  With  regard  to  the  ''  neutrali- 
zation *'  plan,  the  British  Secretary,  Sir  Edward  Grey, 
replied,  on  November  25, 1909 : 

The  general  principle  .  .  .  entirely  commends  itself  to  His 
Majesty's  Government,  so  far  as  the  preservation  of  the  Open  Door 
policy  and  equal  commercial  opportunity  are  concerned,  and  would 
in  their  opinion  be  well  adapted  to  securing  to  China  full  control 
in  Manchuria.  I  am,  however,  of  opinion,  that  until  the  pending 
negotiations  for  the  Hukuang  loan  have  been  completed,^^  it  would 
seem  undesirable  to  consider  the  question  of  another  international 
loan  for  China's  railway  undertakings,  and  I  would  suggest,  there- 
fore, that,  for  the  present  at  any  rate,  it  would  be  wiser  to  postpone 
consideration  of  the  first  scheme. 

Sir  Edward  followed  with  the  suggestion  that  Japan 
be  invited  to  participate  in  the  Chinchow-Aigun  project.^' 

"See  post.  Chapter  XX. 

"17.  B.  For.  Rels.,  1910,  p.  235. 


ago      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  suggestion  the  United  States  Government  imme- 
diately accepted,  but  nothing  ever  came  of  this  phase  of 
the  plan. 

On  December  23,  1909,  the  American  Charge  at  Peking 
reported  to  his  Government  the  approval  by  the  Chinese 
Government  of  the  neutralization  plan.^* 

Russian  Reply.  The  Knox  scheme  came  to  naught, 
however,  through  the  opposition  of  Russia  and  Japan 
which  was  expressed  in  no  uncertain  terms.  The  reasons 
for  this  disapproval,  as  stated  by  Russia  in  an  aide- 
memoire  delivered  January  21,  1910,  were  as  follows : 

Nothing  appears  at  the  present  time  to  threaten  either  this 
sovereignty  or  the  open  door  policy  in  Manchuria.  Consequently, 
the  Imperial  Government  cannot  discover  in  the  present  condition 
of  Manchuria  any  reason  necessitating  the  placing  on  the  order  of 
the  day  of  the  questions  raised  by  the  United  States  Government. 
At  the  same  time  the  Imperial  Government  beUeves  that  it  must 
declare  with  absolute  frankness  that  the  establishment  of  an  inter- 
national administration  and  control  of  the  Manchurian  railroads 
as  proposed  by  the  Federal  Government  would  seriously  injure 
Russian  interests,  both  public  and  private,  to  which  the  Imperial 
Government  attaches  capital  importance.  This  proposition  cannot, 
therefore,  meet  with  a  favorable  reception  on  its  part. 

Going  on  to  discuss  more  specifically  the  interests  of 
Russia  in  Manchuria,  the  aide-memoire  says: 

The  development  of  Manchuria  and  the  exploitation  of  its 
natural  resources  are  not  the  only  purposes  pursued  by  the  Chinese 
Blastem  Railroad.  The  latter  is  of  a  public  interest  of  the  first 
order  to  Russia.  It  constitutes  the  principal  line  of  communication 
between  the  Russian  possessions  in  the  Far  East  and  the  rest  of 
the  Empire ;  it  is  also  the  great  artery  by  which  these  possessions 

"For.  Rels.,  1910,  p.  240. 


THE  JAPANESE  IN   MANCHURIA  321 

are  supplied  with  Russian  merchandise.  In  this  way  the  line  is 
but  an  integral  part  of  the  great  Trans-Siberian  Railway,  which  is 
used  by  almost  all  of  Western  Europe  in  its  relations  with  the  Far 
East.  It  is  this  consideration  that  decided  the  Russian  Govern- 
ment to  guarantee,  at  very  considerable  expense,  the  capital  invested 
in  the  construction  of  the  Chinese  Eastern  Railway,  and  to  cover 
the  deficit  resulting  from  its  operation.  It  cannot,  therefore,  be  a 
matter  of  indifference  to  the  Imperial  Government  whether  it  is  an 
international  organ  that  administers  a  line  of  such  importance,  or, 
on  the  contrary,  a  Russian  stock  company  which  is  obliged  not  to 
fix  the  rates  and  conditions  of  transportation  of  merchandise  by 
the  Chinese  Eastern  Railroad  without  the  consent  of  the  Russian 
Government,  and  which,  by  the  very  nature  of  the  concession 
obtained,  is  closely  connected  with  the  interests  of  the  nation. 

Regarding  the  Chinchow-Aigun  Railroad  the  aide- 
memoire  declared  that  the  project  was  one  of  capital 
importance  to  the  Russian  Government.  **Its  accom- 
plishment will  open  up  a  new  route  giving  access  from 
the  south  not  only  to  the  Chinese  Eastern  Railroad,  but 
directly  to  Russian  possessions  at  Aigun.  This  shows 
adequately  the  strategic  and  political  importance  of  the 
enterprise.*^  Moreover,  the  construction  of  this  line  will 
essentially  modify  the  conditions  under  which  eastern 
Mongolia  and  the  north  of  Manchuria  are  served  by  the 
Chinese  Eastern  Railroad."  The  matter,  therefore,  it 
was  declared,  was  one  that  needed  to  be  further  consid- 
ered before  a  decision  as  to  the  attitude  of  the  Russian 
Government  could  be  reached.  The  memoire  concluded 
with  the  following  paragraph: 

It  is  the  same  with  any  future  project  concerning  a  financial 
participation  in  the  construction  of  railroads  in  Manchuria.  The 
Imperial  Government  considers  that  it  must  reserve  the  privilege 

"  Italics  not  in  the  original. 
21 


322      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  examining  every  project  of  this  kind  from  a  double  standpoint 
of  its  political  and  strategical  interests  and  of  the  interests  of  the 
Chinese  Eastern  Railroad.  Then  only  could  it  take  a  position  in 
regard  to  each  of  the  lines  which  might  be  projected.^' 

A  month  later — February  24,  1910 — ^Russia  informed 
the  United  States  that  **  a  careful  study  of  the  Chinchow- 
Aigun  Railroad  project  has  convinced  the  Imperial  Rus- 
sian Government  that  such  a  railroad  would  be  exceed- 
ingly injurious  both  to  the  strategic  and  to  the  economic 
interests  of  Russia.  China  in  1899  engaged  not  to  build 
railroads  to  the  north  of  Peking  with  foreign  capital 
other  than  Russian,  and  Russia  could  be  willing  not  to 
insist  on  the  execution  by  China  of  this  obligation  only 
under  the  conditions  that  railroads  built  with  capital 
provided  by  international  syndicates  should  not  be  an 
evident  menace  to  the  security  of  the  Russian  frontier 
and  should  not  injure  the  interests  of  Russians  railroad 
enterprise  in  Manchuria. ' '  ^"^ 

Secret  Russo-Chinese  Agreement  of  1899.  This  asser- 
tion, made  in  1910  by  Russia,  that  it  had  a  special  promise 
from  China,  dating  from  1899,  was  in  clear  opposition  to 
the  solemn  engagement  of  Russia  in  the  Portsmouth 
Treaty  that  it  had  not  in  Manchuria  "  any  territorial 
advantages  or  preferential  or  exclusive  concessions  in 
impairment  of  Chinese  sovereignty  or  inconsistent  with 
the  principle  of  equal  opportunity  " ;  as  well  as  incon- 

"  V.  8.  For.  Rcls.,  1910,  p.  240. 

"  V.  8.  For.  Rels.,  1910,  p.  261.  In  this  communication  the  Russian 
Government  went  on  to  say  that  it  had  conceived  the  plan  of  advising  China 
not  to  build  the  Chinchow-Aigim  line,  but,  instead  to  build  a  railroad  from 
Kalgan  to  Urga,  and  further  to  the  Russian  frontier  at  Kiakhta.  Nothing, 
however,  has  since  come  of  this  project. 


THE  JAPANESE  IN  MANCHURIA  323 

sistent  with  Article  IV  of  that  treaty,  which  declared  that 
* '  Japan  and  Kussia  reciprocally  engage  not  to  obstruct 
any  general  measures  common  to  all  countries,  which 
China  may  take  for  the  development  of  the  commerce  and 
industry  of  Manchuria. ' ' 

It  is,  therefore,  not  surprising  that  the  American  Gov- 
ernment should  have  asked  for  a  copy  of  the  promise  of 
1899  of  the  existence  of  which,  up  to  that  time,  it  had 
been  in  total  ignorance.  When  supplied,  it  was  found  to 
be  in  form  of  a  note  addressed  by  the  Chinese  Foreign 
OflSce  (Tsung-li  Yamen)  to  the  Russian  Minister,  M. 
de  Giers,  of  June  1, 1899,  and  reading  as  follows : 

Your  Excellency.  We  discussed  with  Your  Excellency  a  few 
days  ago  the  subject  of  a  railway  connecting  the  Manchurian 
Railway  with  Peking,  and  explained  the  diflBculty  felt  by  the 
Chinese  Government  in  acceding  to  the  proposal.  But  we  stated 
clearly  that  no  other  Government  would  be  allowed  to  construct 
such  a  railway.  We  now  wish  to  reiterate  in  the  plainest  terms  that 
China  agrees  that  if  railways  are  in  future  built  from  Peking  to 
the  north  or  to  the  northeast  toward  the  Russian  border,  China 
reserves  the  right  to  construct  such  roads  with  Chinese  capital  and 
under  Chinese  supervision,  but  if  it  is  proposed  to  have  such  con- 
struction undertaken  by  any  other  nation,  the  proposal  shall  first 
be  made  to  the  Russian  Government  or  to  the  Russian  syndicate  to 
construct  the  railway,  and  on  no  consideration  will  any  other 
Government  or  syndicate  of  any  other  nationality  be  allowed  to 
construct  the  railway.  We.  ask  Your  Excellency  to  communicate 
this  message  to  the  Foreign  Office  of  Your  Excellency's  Govern- 
ment.^* 

There  can  be  no  question  that  the  American  Govern- 
ment was  well  within  its  right  when,  on  April  18,  1910, 
in  a  memorandum  to  the  Russian  Government,  it  declared 

"  U.  S.  For.  Rels.,  1910,  p.  264. 


324      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

that  "  the  Govenunent  of  China  obviously  could  not  by 
means  of  preferential  agreements  with  any  single  Power 
dispose  of  rights  which  it  had  already  granted  by  treaty 
generally  to  other  nations,  and  the  United  States  would 
therefore  be  forced  to  contend  that  to  invoke,  in  deroga- 
tion of  general  treaty  rights,  such  an  agreement  as  the 
Russo-Chinese  understanding  of  1899  might  nullify 
stipulations  of  treaties  between  China  and  foreign 
Powers,  and  thus  seriously  curtail  the  rights  of  the 
nationals  of  other  countries.'^  ^® 

Japan's  Reply  to  Secretary  Knox's  Proposal.  Japan's 
reply  to  Secretary  Knox's  plan  for  neutralizing  the  Man- 
churian  railways  was  a  disapproval  equally  as  strong  as 
the  Russian — in  fact,  it  would  appear  that  the  two  coun- 
tries had  co-operated  in  their  opposition  to  the  scheme. 
In  the  note  of  Count  Komura  dated  January  21,  1910,  to 
the  American  Ambassador  at  Tokyo,  the  Japanese  Gov- 
ernment declared :  ^^ 

The  most  serious  objection  to  the  proposal  in  question  Hes  in  the 
fact  that  it  contemplates  a  very  important  departure  from  the  terms 
of  the  Treaty  of  Portsmouth.  That  treaty  was  designed  to  estab- 
lish in  Manchuria  a  permanent  order  of  things,  and  the  Imperial 
Government  firmly  believed  that  in  a  strict  and  loyal  adhesion  to 
its  provisions  are  to  be  found  the  highest  guarantees  of  enduring 
peace  and  repose  in  this  part  of  the  world  and  of  the  orderly 
advancement  of  Manchuria.  Not  the  least  difficult  of  the  many 
and  important  problems  that  were  definitely  solved  at  Portsmouth 
was  the  question  of  railways.  That  adjustment  subsequently 
received  the  deliberate  confirmation  of  the  Chinese  Government  in 
the  Treaty  of  Peking  (December  22,  1905),  and  the  railway  opera- 
tions now  carried  on  in  Southern  Manchuria  are  consistent  with 

» Ibid.,  p.  265. 

"  U.  8.  For.  Rels.,  1910,  p.  251. 


THE   JAPANESE  IN   MANCHURIA  325 

the  original  concessions  which  were  with  equal  deliberation  granted 
by  the  same  Power. 

Nor  can  the  Imperial  Government  see  in  the  present  condition 
of  things  in  Manchuria  anything  so  exceptional  as  to  make  it  necee- 
sary  or  desirable  to  set  up  there  an  exceptional  system  not  required 
in  other  parts  of  China.  There  is  nothing  in  the  actual  situation 
in  that  region,  so  far  as  the  Imperial  Government  are  aware,  which 
exceptionally  interferes  with  the  undisturbed  enjoyment  by  China 
of  her  political  rights.  So  far  as  the  question  of  the  open  door  is 
concerned  the  principle  of  equal  opportunity  possesses  in  its  appli- 
cation to  Manchuria  a  more  comprehensive  signification  than  it  has 
elsewhere  in  China,  since,  in  virtue  of  Article  VII  of  the  Treaty  of 
Portsmouth,  the  Japanese  and  Russian  railways  in  those  Provinces 
are  dedicated  exclusively  to  commercial  and  industrial  uses. 
Finally,  in  the  matter  of  railway  administration,  it  is  impossible 
for  the  Imperial  Government  to  believe  that  the  substitution  of  an 
international  in  place  of  a  national  regime  would  prove  advan- 
tageous or  beneficial.  On  the  contrary,  it  seems  to  them  that  in 
the  presence  of  such  a  system  economy  and  efficiency  would,  in  the 
nature  of  things,  be  obliged  to  yield  to  political  exigencies  and  that 
the  divided  responsibility  of  the  system  would  inevitably  mean  an 
absence  of  due  responsibility  to  the  serious  disadvantage  of  the 
public  and  the  detriment  of  the  service. 

These  are  the  principal  reasons  why  the  project  under  examina- 
tion does  not  commend  itself  to  the  favorable  consideration  of  the 
Imperial  Government.  But  there  are  other  cogent  reasons  which 
cannot  be  ignored. 

In  the  regions  affected  by  the  Japanese  railways  in  Manchuria 
there  have  grown  numerous  Japanese  industrial  and  commercial 
undertakings  which  owed  their  inception,  as  they  owe  their  con- 
tinual existence,  to  the  fact  that  the  Imperial  Government,  possess- 
ing the  railways  in  question,  are  able  to  extend  to  those  enterprises 
and  to  the  persons  engaged  in  them  due  protection  and  defense 
against  attack  and  pillage  by  lawless  bands  that  still  infest  the 
country.  In  the  development  of  these  enterprises,  which  are  con- 
tributing in  such  a  marked  degree  to  the  prosperity  and  progress  of 
Manchuria,  a  large  number  of  Japanese  subjects  and  large  sums  of 
Japanese  money  are  enlisted,  and  the  Imperial  Government  could 


320      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

not  in  good  faith  or  with  a  due  sense  of  their  responsibility  consent 
to  surrender  the  means  by  which  such  protection  and  defense  are 
made  possible. 

Russian  and  Japanese  Pressure  Upon  China.  Both  the 
Japanese  and  Russian  Governments  made  strong  repre- 
sentations to  the  Chinese  Government  that  it  should  not 
give  its  assent  to  the  Chinchow-Aigun  project. 

On  January  31,  1910,  the  Japanese  Minister  wrote  to 
the  Chinese  Foreign  Office : '  *  Before  the  Chinese  Govern- 
ment determines  anything  the  consent  of  my  Government 
must  first  be  obtained.  If  the  position  of  my  country  is 
ignored  and  a  decision  is  made  without  referring  the 
matter  to  my  Government,  it  will  be  hard  to  estimate  the 
seriousness  of  the  trouble  that  may  be  caused  in  the  rela- 
tions of  the  two  countries." 

The  Russian  Minister  declared  to  China  (February  2, 
1910):  **  The  Russian  Government  expects  that  China 
will  not  settle  such  matters  without  first  consulting 
Russia.  Otherwise  there  will  be  trouble  in  the  relations 
between  the  two  countries." 

Again  in  a  memorandum  transmitted  directly  to  the 
Chinese  Regent,  of  February  8,  1910,  the  Russian  Min- 
ister declared  that  the  Chinchow-Aigun  road  would 
**  affect  both  military  and  political  arrangements  and 
would  materially  change  the  relations  of  the  Manchurian 
railways  to  eastern  Mongolia  and  northern  Manchuria. 
...  In  regard  to  all  future  railways  in  Manchuria  which 
China  may  propose  to  build  with  borrowed  capital,  the 
Russian  Government  must  be  first  consulted  and  must 
first  consider  if  the  plans  have  any  consequence  to  the 
military  and  political  interests  of  Russia,  or  to  the 
Northern  Manchurian  railways." 


THE  JAPANESE  IN  MANCHURIA  327 

France  and  Great  Britain  Fail  to  Support  Secretary 
Knox's  Proposal.  France,  as  an  ally  of  Eussia,  came  to 
the  support  of  Kussia,  and,  in  a  letter  of  March  4,  1910, 
to  the  Chinese  Foreign  Office,  declared  that  Russia  should 
be  consulted  by  China  before  granting  concessions  for 
the  building  of  railways  in  North  Manchuria. 

Great  Britain  declined  to  support  even  the  Chinchow- 
Aigun  project.  Replying  to  a  question  in  Parliament, 
Sir  Edward  Grey  said  (June  15,  1910) : 

The  Chinchow-Aigun  Railway  is  a  railway  which  is  to  cross  the 
Hne  to  Russia  and  is  to  extend  right  up  to  the  Russian  frontier. 
In  these  circumstances  I  think  that  if  the  Chinese  were  going  to 
have  this  railway  made  by  foreigners  we  could  not  in  the  face  of 
the  Anglo-Russian  agreement  take  an  active  part  in  supporting  it 
until  the  Chinese  had  come  to  terms  with  Russia  about  it.  Japan 
has  not  opposed  the  railway  in  principle,  but  has  asked  for  partici- 
pation ;  and  I  think  that  was  a  perfectly  reasonable  demand  on  the 
part  of  Japan.  If  Japan  had  taken  up  the  line  of  stating  that  she 
wished  to  have  a  railway  monopoly  in  Manchuria,  that  would  have 
been  a  distinct  breach  of  the  open  door.  If  she  made  use  of  her 
position  there  by  giving  preferential  treatment  to  her  own  people 
as  against  others,  that  again  would  be  a  breach  of  the  open  door. 
But  for  Japan  to  say  that  after  all  that  has  passed  she  has  an 
interest  in  Manchuria  which  justifies  her  in  wishing  for  participa- 
tion in  railways  which  may  to  some  extent  compete  with  the  railway 
which  is  already  in  existence — not  I  say,  in  opposing  them  in  prin- 
ciple, but  in  asking  for  participation  in  them — it  would  be  going 
too  far  for  us  to  declare  that  that  is  an  unreasonable  demand  to 
make,  and  to  take  active  diplomatic  steps  at  Peking  to  press  for 
the  granting  of  this  concession.^^ 

* '  To  recapitulate, ' '  says  Millard,  in  an  article  in  which 
he  reviews  the  foregoing  correspondence,  **  we  find  that 
the  following  issues  affecting  the  sovereignty  of  China 

»  V.  8.  For.  Rels.,  1910,  p.  269. 


328      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

and  the  open  door  principle  within  her  territory  have 
been  sharply  defined : 

1.  The  right  of  China  to  decide  upon  the  course  of  railway 
development  within  her  territory  is  denied  by.  certain  foreign 
nations. 

2.  Certain  foreign  nations  have  declared  that  their  strategical 
and  political  interests  must  be  considered  as  paramount  in  planning 
a  railway  system  within  China's  territory. 

3.  Certain  foreign  nations  have  asserted  the  right  to  decide  who 
will  finance,  construct,  and  operate  railways  within  China's  terri- 
tory and  to  veto  arrangements  in  regard  to  these  matters  which 
China  has  made  and  wishes  to  carry  out.^- 

Russo-Japanese  Treaty  of  July  4, 1910.  The  next  step  in 
the  Manchuria  question  was  the  signing  of  the  convention 
of  July  4,  1910,23  between  Russia  and  Japan,  providing 
for  joint  action  in  Manchuria — an  agreement  which  was 
undoubtedly  urged  on  by  the  attempt  which  America  had 
made  by  the  Chinchow-Aigun  project,  and  by  the  Knox 
neutralization  plan,  to  place  a  restraint  upon  the  apparent 
intention  of  Japan  and  Russia  to  establish  exclusive 
claims  in  Manchuria. 

This  Russo-Japanese  Convention  was  as  follows : 

The  Imperial  Government  of  Japan  and  the  Imperial  Govera- 
ment  of  Russia,  sincerely  attached  to  the  principles  established  by 
the  convention  concluded  between  them  on  the  17th  (30th)  July, 
1907,^*  and  desirous  to  develop  the  effects  of  that  convention,  with 
a  view  to  the  consolidation  of  peace  in  the  Far  East,  have  agreed 
to  complete  the  said  arrangement  by  the  following  provisions : 

Article  I.  With  the  object  of  facilitating  the  communication 
and  developing  of  the  commerce  of  nations,  the  two  High  Contract- 

"  "  America  in  China,"  in  The  Forum,  vol.  xuv,  p.  66. 
"MacMurray,  No.  1910/1. 
"See  ante,  p  .314. 


THE   JAPANESE  IN   MANCHURIA  329 

ing  Parties  mutually  engage  to  lend  to  each  other  their  friendly 
co-operation,  with  a  view  to  the  amelioration  of  their  respective 
railway  lines  in  Manchuria  and  the  improvement  of  the  connecting 
service  of  the  said  railways,  and  to  abstain  from  all  competition 
prejudicial  to  the  realization  of  this  object. 

II.  Each  of  the  High  Contracting  Parties  engages  to  maintain 
and  respect  the  status  quo  in  Manchuria  resulting  from  the 
Treaties,  Conventions,  and  other  arrangements  concluded  up  to 
this  day  between  Japan  and  Russia,  or  between  either  of  these  two 
Powers  and  China,  Copies  of  the  aforesaid  arrangements  have  been 
interchanged  between  Japan  and  Russia. 

III.  In  case  any  event  arises  of  a  nature  to  menace  the  status 
quo  above  mentioned,  the  two  High  Contracting  Parties  shall  in 
each  case  enter  into  communication  with  each  other  in  order  to 
arrive  at  an  understanding  as  to  the  measures  they  may  judge  it 
necessary  to  take  for  the  maintenance  of  the  said  status  quo. 

Renewal  in  1911  of  the  Anglo -Japanese  Alliance.      On 

July  13,  1911,  was  again  renewed,  for  ten  years,  with 
some  changes,  the  Anglo-Japanese  Alliance  '^^  which  had 
been  originally  entered  into  January  30,  1902,  and 
renewed  August  12,  1905.  These  new  articles  of  alliance 
made  no  mention  of  Korea,  as  had  the  earlier  ones,  but 
reaflBrmed  the  intention  to  insure  the  independence  and 
integrity  of  the  Chinese  Empire  and  equal  opportunities 
for  the  commerce  and  industry^  of  all  nations  in  China. 
Among  the  other  purposes  mentioned  in  the  preamble  is 
*'  the  maintenance  of  the  territorial  rights  of  the  High 
Contracting  Parties  in  the  regions  of  Eastern  Asia  and 
of  India  and  of  the  defense  of  their  '  special  interests  * 
in  those  regions." 

The  agreement  goes  on  to  provide  that  if  either  party 
is  of  opinion  that  its  respective  rights,  as  mentioned  in 

"MacMurray,  No.  1911/7. 


330      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  preamble  are  in  jeopardy,  the  two  governments  will 
communicate  with  one  another  fully  and  frankly  and  con- 
sider what  measures  should  be  taken  to  safeguard  such 
rights;  and  that  *'  if  by  reason  of  unprovoked  attack  or 
aggressive  action,  wherever  arising,  on  the  part  of  any 
Power  or  Powers,  either  High  Contracting  Party  should 
be  involved  in  war  in  defence  of  its  territorial  rights  or 
special  interests  mentioned  in  the  preamble  of  this  agree- 
ment, the  other  High  Contracting  Party  will  at  once  come 
to  the  assistance  of  its  ally,  and  will  conduct  the  war  in 
common,  and  make  peace  in  mutual  agreement  with  it." 

It  is  also  provided  that  neither  of  the  two  governments 
will  enter  into  any  separate  agreements  with  other 
Powers  to  the  prejudice  of  the  interests  mentioned  in  the 
preamble,  but  that  **  should  either  High  Contracting 
Party  conclude  a  treaty  of  general  arbitration  with  a 
third  Power,  it  is  agreed  that  nothing  in  this  agreement 
shall  entail  upon  such  contracting  party  an  obligation  to 
go  to  war  with  the  Power  with  whom  such  treaty  of 
arbitration  is  in  force." 

It  is  known  that  this  reservation  was  inserted  in  order 
that  Great  Britain  should  not  be  called  upon,  under  the 
treaty,  to  engage  in  war  against  the  United  States,  with 
which  country  Great  Britain  had  negotiated  a  convention 
of  general  arbitration.  This  convention,  however,  failed 
to  receive  the  approval  of  the  United  States  Senate.^^ 

Japan's  Twenty-One    Demands    in    1915    Upon   China. 

Early  in  1915  came  the  famous  Twenty-One  Demands  ^^ 

"There  is,  however,  in  force  a  treaty  of  limited  arbitration  between 
Great  Britain  and  the  United  States,  signed  April  4,  1908,  and  renewed  in 
1913,  and  again  in  1918  for  a  further  period  of  five  years.  U.  8.  Statutes 
at  Large,  1917-1918,  Pt.  u. 

"  For  the  text  of  the  original  demands,  and  other  documents  relevant  to 


THE  JAPANESE  IN  MANCHUEIA  331 

which  Japan  made  upon  China.  Later  on  there  will  be 
occasion  to  consider  the  general  significance  of  these 
demands.  Here  they  will  be  discussed  only  in  so  far  as 
they  related  to  the  situation  in  Manchuria.  Because,  in 
these  demands,  Japan  so  plainly  set  forth  her  ambitions 
in  and  intentions  towards  China,  it  will  be  necessary  to 
consider  them  in  some  detail — giving  them  in  their 
original  and  revised  forms,  and  showing  the  final  results 
reached. 

These  demands,  as  is  well  known,  were  segregated  into 
five  groups,  the  second  of  which  related  to  Manchuria  and 
Eastern  Inner  Mongolia. 

Group  II— Original  Form.  As  later  published  by  the 
Japanese  Government,  Group  II  of  the  demands,  in  their 
original  form,  read : 

The  Japanese  Government  and  the  Chinese  Government,  in  view 
of  the  fact  that  the  Chinese  Government  has  always  recognized  the 
predominant  position  of  Japan  in  South  Manchuria  and  Eastern 
Inner  Mongolia,^*  agree  to  the  following  articles: 

Article  I.  The  two  Contracting  Parties  mutually  agree  that 
the  term  of  the  lease  of  Port  Arthur  and  Dairen  and  the  term 
respecting  the  South  Manchuria  Railway  and  the  Antung-Mukden 
Railway  shall  be  extended  to  a  further  period  of  99  years  re- 
spectively. 

Article  II.  The  Japanese  subjects  shall  be  permitted  in  South 
Manchuria  and  Eastern  Inner  Mongolia  to  lease  and  own  land 
required  either  for  erecting  buildings  for  various  commercial  and 
industrial  uses  or  for  farming. 

the  negotiations  resulting  in  these  treaties  and  exchanges  of  notes  between 
Japan  and  China,  May  25,  1915,  see  MacMurray,  No.  1915/8. 

"  The  version  given  out  by  the  Chinese  Government  uses  the  phrase  "  has 
always  acknowledged  the  special  position  enjoyed  by  Japan." 


332      FOKEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

Abticle  III.  The  Japanese  subjects  shall  have  liberty  to  enter, 
reside,  and  travel  in  South  Manchuria  and  Eastern  Inner  Mon- 
golia, and  carry  on  business  of  various  kinds — commercial,  indus- 
trial, and  otherwise. 

Article  IV.  The  Chinese  Government  grant  to  the  Japanese 
subjects  the  right  of  mining  in  South  Manchuria  and  Eastern 
Inner  Mongolia.  As  regards  the  mines  to  be  worked,  they  shall  be 
decided  upon  in  a  separate  agreement. 

Article  V.  The  Chinese  Government  agree  that  the  consent 
of  the  Japanese  Government  shall  be  obtained  in  advance,  (1) 
whenever  it  is  proposed  to  grant  to  other  nationals  the  right  of 
constructing  a  railway  or  to  obtain  from  other  nationals  the  supply 
of  funds  for  constructing  a  railway  in  South  Manchuria  and  East- 
ern Inner  Mongolia,  and  (2)  whenever  a  loan  is  to  be  made  with 
any  other  Power,  under  security  of  taxes  of  South  Manchuria  and 
Eastern  Inner  Mongolia. 

Article  VI.  The  Chinese  Government  engage  that  whenever 
the  Chinese  Government  need  the  services  of  political,  financial, 
©r  military  advisers  or  instructors  in  South  Manchuria  or  in  East- 
ern Inner  Mongolia,  Japan  shall  first  be  consulted. 

Article  VII.  The  Chinese  Government  agree  that  the  control 
and  management  of  the  Kirin-Changchun  Railway  shall  be  handed 
over  to  Japan  for  a  term  of  99  years,  dating  from  the  signing  of 
this  Treaty. 

Group  n — ^Revised.  Partly,  possibly  because  of  Cliiiiese 
protestations,  but  principally  because  of  outside  pressure 
upon  the  part  of  the  Powers  who  had  become  cognizant  of 
the  fact  that  these  demands  were  being  pressed,  Japan 
consented  to  a  revision  of  her  demands.  In  their  revised 
form,  those  relating  to  South  Manchuria  and  neighboring 
Eastern  Inner  Mongolia  read  as  follows :  ^^ 

*•  This  is  from  the  text  as  published  by  the  Chinese  Government. 


THE   JAPANESE  IN  MANCHURIA  333 

Group  II 

The  Japanese  Government  and  the  Chinese  Government,  with  a 
view  to  developing  their  economic  relations  in  South  Manchuria 
and  Eastern  Inner  Mongolia,  agree  to  the  following  articles : — 

Article  1.  The  two  oontra<;ting  P^arties  mutually  agree  that 
the  term  of  lease  of  Port  Arthur  and  Dalny  and  the  term  of  the 
South  Manchuria  Railway  and  the  Antung-Mukden  Railway,  shall 
be  extended  to  99  years. 

(Supplementary  Exchange  of  Notes) 

The  term  of  lease  of  Port  Arthur  and  Dalny  shall  expire  in  the 
86th  year  of  the  Republic  or  1997.  The  date  for  restoring  the 
South  Manchurian  Railway  to  China  shall  fall  due  in  the  91st 
year  of  the  Republic  or  2002.  Article  12  in  the  original  South 
Manchurian  Railway  Agreement  that  it  may  be  redeemed  by  China 
after  36  years  after  the  traflBc  is  opened  is  hereby  cancelled.  The 
term  of  the  Antung-Mukden  Railway  shall  expire  in  the  96th  year 
of  the  Republic  or  2007. 

Article  2.  Japanese  subjects  in  South  Manchuria  may  lease 
or  purchase  the  necessary  land  for  erecting  suitable  buildings  for 
trade  and  manufacture  or  for  prosecuting  agricultural  enterprises. 

Article  3.  Japanese  subjects  shall  be  free  to  reside  and  travel 
in  South  Manchuria  and  to  engage  in  business  and  manufacture 
of  any  kind  whatsoever. 

Article  3a.  The  Japanese  subjects  referred  to  in  the  preceding 
two  articles,  besides  being  required  to  register  with  the  local 
authorities  passports  which  they  must  procure  under  the  existing 
regulations,  shall  also  submit  to  the  police  laws  and  ordinances  and 
tax  regulations,  which  are  approved  by  the  Japanese  Consul.  Civil 
and  criminal  cases  in  which  the  defendants  are  Japanese  shall  be 
tried  and  adjudicated  by  the  Japanese  Consul;  those  in  which  the 
defendants  are  Chinese  shall  be  tried  and  adjudicated  by  Chinese 
Authorities.  In  either  case  an  officer  can  be  deputed  to  the  court 
to  attend  the  proceedings.  But  mixed  civil  cases  between  Chinese 
and  Japanese  relating  to  land  shall  be  tried  and  adjudicated  by 


334      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

delegates  of  both  nations  conjointly,  in  accordance  with  Chinese 
law  and  local  usage.  When  the  judicial  system  in  the  said  region 
is  completely  reformed,  all  civil  and  criminal  cases  concerning 
Japanese  subjects  shall  be  tried  entirely  by  Chinese  law  courts.'" 

Article  4.     (Changed  to  an  exchange  of  notes.) 

The  Chinese  Government  agrees  that  Japanese  subjects  shall  be 
permitted  forthwith  to  investigate,  select,  and  then  prospect  for 
and  open  mines  at  the  following  places  in  South  Manchuria,  apart 
from  those  mining  areas  in  which  mines  are  being'  prospected  for  or 
worked;  until  the  Mining  Ordinance  is  definitely  settled,  methods 
at  present  in  force  shall  be  followed. 


Province  of                       Locality 

District 

Minera 

Feng-tien 

Niu  Hsin  T'ai 

Pen-hsi 

Coal 

Tien  Shih  Fu  Kou 

Pen-hsi 

do 

Sha  Sung  Kang 

Hai-lung 

do 

T'ieh  Ch'ang 

T'ung-hua 

do 

Nuan  Ti  T'ang 

Chin 

do 

An  Shan  Chan  region 

From  Liao-yang 

to  Pen-hsi 

Iron. 

Province  of  Kirin 

(Southern  portion) 

Sha  Sung  Kang 

Ho-lung 

C.  &.  I 

Kang  Yao 

Chi-Un  (Kirin) 

Coal 

Chia  P'i  Kou 

Hua-tien 

Gold 

Article  5.     (Changed  to  an  exchange  of  notes.) 

The  Chinese  Government  declares  that  China  will  hereafter  pro- 
vide funds  for  building  railways  in  South  Manchuria;  if  foreign 


*•  In  an  "  Explanatory  Xote  "  handed  to  the  Chinese  Minister  of  Foreign 
Affairs  by  the  Japanese  Minister  at  the  time  of  the  delivery  of  the  ulti- 
matum, on  May  7,  1915,  it  was  declared  that  "  Article  4  [3a]  of  Group  II 
relating  to  the  approval  of  police  sind  ordinances  and  local  taxes  by  the 
Japanese  Consul  may  form  the  subject  of  a  secret  agreement."  This 
provision  appeared  only  in  the  official  communique  supplied  by  the  Chinese 
Government. 


THE  JAPANESE  IN  MANCHUEIA  335 

capital  is  required,  the  Chinese  Government  agrees  to  negotiate  for 
a  loan  with  Japanese  Capitalists  first.. 

Article  5a.     (Changed  to  an  exchange  of  notes.) 

The  Chinese  Government  agrees  that  hereafter,  when  a  foreign 
loan  is  to  be  made  on  the  security  of  the  taxes  of  South  Manchuria 
(not  including  customs  and  salt  revenue  on  the  security  of  which 
loans  have  already  been  made  by  the  Central  Government)  it  will 
negotiate  for  the  loan  with  Japanese  capitalists  first. 

Article  6.     (Changed  to  an  exchange  of  notes.) 

The  Chinese  Government  declares  that  hereafter  if  foreign  ad- 
visers or  instructors  on  political,  financial,  military  or  police  mat- 
ters are  to  be  employed  in  South  Manchuria,  Japanese  will  be 
employed  first. 

Article  7.  The  Chinese  Government  agrees  speedily  to  make  a 
fundamental  revision  of  the  Kirin-Changchun  Railway  Loan 
Agreement,  taking  as  a  standard  the  provisions  in  railway  loan 
agreements  made  heretofore  between  China  and  foreign  financiers. 
If,  in  future,  more  advantageous  terms  than  those  in  existing  rail- 
way loan  agreements  are  granted  to  foreign  financiers,  in  connexion 
with  railway  loans,  the  above  agreement  shall  again  be  revised  in 
accordance  with  Japan's  wishes. 

CHINESE  counter-proposal  TO  ARTICLE  7 

All  existing  treaties  between  China  and  Japan  relating  to  Man- 
churia shall,  except  where  otherwise  provided  for  by  this  Conven- 
tion, remain  in  force. 

matters  RELATING  TO  EASTERN  INNER  MONGOLIA 

1.  The  Chinese  Government  agrees  that  hereafter  when  a  for- 
eign loan  is  to  be  made  on  the  security  of  the  taxes  of  Eastern 
Inner  Mongolia,  China  must  negotiate  with  the  Japanese  Govern- 
ment first. 

2.  The  Chinese  Government  agrees  that  China  will  herself  pro- 
vide funds  for  building  the  railways  in  Eastern  Inner  Mongolia; 
if  foreign  capital  is  required,  she  must  negotiate  with  the  Japanese 
Government  first. 


336      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

3.  The  Chinese  Government  agrees,  in  the  interest  of  trade  and 
for  the  residence  of  foreigners,  to  open  by  China  herself,  as  soon 
as  possible,  certain  places  suitable  in  Eastern  Inner  Mongolia  as 
Commercial  Ports.  The  plsices  which  ought  to  be  opened  are  to  be 
chosen,  and  the  regulations  are  to  be  drafted,  by  the  Chinese  Gov- 
ernment, but  the  Japanese  Minister  must  be  consulted  before  mak- 
ing a  decision. 

4.  In  the  event  of  Japanese  and  Chinese  desiring  jointly  to 
undertake  agricultural  enterprises  and  industries  incidental  thereto, 
the  Chinese  Government  shall  give  its  permission. 

Treaties  and  Notes  of  1915.  On  May  7,  Japan  issued 
an  ultimatum  to  China,  giving  her  a  short  forty-eight 
hours  in  which  to  accept  the  demands  in  their  revised 
form.  China,  having  no  option,  yielded.  The  resulting 
treaty  and  notes  so  far  as  they  related  to  Manchuria  and 
Eastern  Inner  Mongolia  were  as  follows: 

Article  1.  The  Two  High  Contracting  Parties  agree  that 
the  term  of  lease  of  Port  Arthur  and  Dalny  and  the  terms  of  the 
South  Manchuria  Railway  and  the  Antung-Mukden  Railway,  shall 
be  extended  to  99  years. 

Article  2.  Japanese  subjects  in  South  Manchuria  may,  by 
negotiation,  lease  land  necessary  for  erecting  suitable  buildings  for 
trade  and  manufacture  or  for  prosecuting  agricultural  enterprises. 

Article  3.  Japanese  subjects  shall  be  free  to  reside  and  travel 
in  South  Manchuria  and  to  engage  in  business  and  manufacture 
of  any  kind  whatsoever. 

Article  4.  In  the  event  of  Japanese  and  Chinese  desiring 
jointly  to  undertake  agricultural  enterprises  and  industries  inci- 
dental thereto,  the  Chinese  Government  may  give  its  permission. 

Article  5.  The  Japanese  subjects  referred  to  in  the  preceding 
three  articles,  besides  being  required  to  register  with  the  local 
Authorities  passports  which  they  must  procure  under  the  existing 
regulations,  shall  also  submit  to  the  police  laws  and  ordinances  and 
taxation  of  China. 


THE  JAPANESE  IN  MANCHURIA  337 

Civil  and  criminal  cases  in  which  the  defendants  are  Japanese 
shall  be  tried  and  adjudicated  by  the  Japanese  Consul;  those  in 
which  the  defendants  are  Chinese  shall  be  tried  and  adjudicated  by 
Chinese  Authorities.  In  either  case  an  officer  may  be  deputed  to 
the  court  to  attend  the  proceedings.  But  mixed  civil  cases  between 
Chinese  and  Japanese  relating  to  land  shall  be  tried  and  adjudi- 
cated by  delegates  of  both  nations  conjointly  in  accordance  with 
Chinese  law  and  local  usage. 

When,  in  future,  the  judicial  system  in  the  said  region  is  com- 
pletely reformed,  all  civil  and  criminal  cases  concerning  Japanese 
subjects  shall  be  tried  and  adjudicated  entirely  by  Chinese  law 
courts. 

Article  6.  The  Chinese  Government  agrees,  in  the  interest  of 
trade  and  for  the  residence  of  foreigners,  to  open  by  China  herself, 
as  soon  as  possible,  certain  suitable  places  in  Eastern  Inner  Mon- 
golia as  Commercial  Ports. 

Article  7.  The  Chinese  Government  agrees  speedily  to  make 
a  fundamental  revision  of  the  Kirin-Changchun  Railway  Loan 
Agreement,  taking  as  a  standard  the  provisions  in  railway  loan 
agreements  made  heretofore  between  China  and  foreign  financiers. 

When  in  future,  more  advantageous  terms  than  those  in  existing 
railway  loan  agreements  are  granted  to  foreign  financiers  in  con- 
nection with  railway  loans,  the  above  agreement  shall  again  be 
revised  in  accordance  with  Japan's  wishes. 

Article  8.  All  existing  treaties  between  China  and  Japan 
relating  to  Manchuria  except  where  otherwise  provided  for  by  this 
treaty  remain  in  force. 

Accompanying  this  treaty  was  an  exchange  of  notes 
between  China  and  Japan  which  constituted,  in  effect, 
annexes  to  the  treaty. 

In  one  of  these  was  declared  cancelled  the  provision 
of  the  original  South  Manchuria  Railway  agreement  that 
the  road  might  be  redeemed  by  China  after  thirty-six 
years.    Also  it  was  provided  that  the  terms  of  the  An- 

22 


338      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

tung-Mukden  Railway  should  be  extended  to  the  year 
2007. 

In  another  note  it  was  declared  that  the  commercial 
ports  to  be  opened  should  be  selected  by  China  only  after 
consulting  the  Japanese  Minister. 

In  still  another  note  areas  were  specified  within  which 
Japanese  subjects  might  "  investigate  and  select  mines, 
except  those  being  prospected  for  or  worked,  and  the 
Chinese  Government  will  then  permit  them  to  prospect 
or  work  the  same. ' '  Other  notes  contained  the  following 
agreements : 

China  will  hereafter  provide  funds  for  building  necessary  rail- 
ways in  South  Manchuria  and  Eastern  Inner  Mongolia ;  if  foreign 
capital  is  required  China  may  negotiate  for  a  loan  with  Japanese 
capitalists  first:  and  further,  the  Chinese  Government,  when  mak- 
ing a  loan  in  future  on  the  security  of  the  taxes  in  the  above 
mentioned  places  (excluding  the  salt  and  customs  revenues  which 
have  already  been  pledged  by  the  Chinese  Central  Government) 
may  negotiate  for  it  with  Japanese  capitalists  first. 

That  "hereafter,  if  foreign  advisers  or  instructors  on  political, 
military  or  police  matters  are  to  be  employed  in  South  Manchuria, 
Japanese  may  be  employed  first." 

That  the  term  "  lease  by  negotiation  "  contained  in  Article  2  of 
the  treaty  should  be  imderstood  to  imply  a  long-term  lease  of  not 
more  than  thirty  years  and  also  the  possibility  of  its  unconditional 
renewal. 

That  Chinese  authorities  will  notify  the  Japanese  Consul  of 
the  Pohce  laws  and  ordinances  and  the  taxation  to  which  Japanese 
subjects  shall  be  subject  according  to  Article  5  of  the  Treaty  so 
as  to  come  to  an  understanding  with  him  before  their  enforcement. 

Comment  on  the  Foregoing  Demands,  Treaty,  and  Notes. 

It  has  been  thought  proper  to  set  forth  the  demands  in 
their  original  form  since  they  serve  to  show  the  desires 
and  ambitions  of  Japan  in  Manchuria  and  Mongolia. 


TH^   JAPANESE  IN  MANCHURIA  339 

The  demands  have  also  to  be  interpreted  in  the  light  of 
Group  V  of  the  Demands  which  were  of  general  terri- 
torial application  and  which  would,  if  granted,  have  made 
of  China  a  virtual  political  dependency  of  Japan.  Account 
IS  also  to  be  taken  of  a  fact  that  is  true  of  aU  of  the 
Twenty-One  Demands,  that,  with  only  a  few  relatively 
unimportant  exceptions,  they  were  not  based  upon,  and 
in  settlement  of,  previously  pending  controversies,  but 
were  simply  drawn  up  and  presented  by  Japan  at  a  time 
when  she  thought  that  she  would  be  able  to  enforce  her 
will  without  regard  to  existing  rights  and  obligations  or 
to  her  treaty  engagements  with  China  and  the  other 
Powers. 

First  of  all  it  will  be  observed  that  Japan  introduced 
Group  II  of  her  demands  with  the  statement  that  *'  the 
Chinese  Government  has  always  acknowledged  the  special 
position  enjoyed  by  Japan  in  South  Manchuria  and 
Eastern  Inner  Mongolia."  This  was  not  a  fact  and 
obviously  represented  an  attempt  upon  the  part  of  Japan 
to  get  China  committed  to  this  proposition.  In  its 
revised  form,  for  this  proposition  was  submitted  the 
statement  that  the  two  governments  "  with  a  view  to 
developing  their  economic  relations  in  South  Manchuria 
and  Eastern  Inner  Mongolia,  agree,  etc." 

By  Article  I  of  the  group  the  lease  of  Port  Arthur  and 
Dalny  and  the  term  of  the  South  Manchuria  and  Antung- 
Mukden  Railways  were  extended  to  ninety-nine  years. 
This  was  a  very  important  matter  to  Japan.  Under  the 
then  existing  lease  and  agreements  the  lease  of  the  Liao- 
tung,  or  Kwantung  Peninsula,  as  it  is  also  called,  would 
have  expired  in  eight  years,  that  is,  in  1923,  and  the  right 
to  control  the  railway  would  have  expired  in  1938. 


340      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

As  Mr.  Bronson  Rea,  editor  and  proprietor  of  the 
Far  Eastern  Review,  says : 

It  was  recognized  that  if  a  stable  government  was  established  in 
China  and  the  country  regained  its  financial,  feet  and  created  a 
modern  army  and  navy,  she  would  never  willingly  consent  to  an 
extension  of  the  lease  without  some  compensating  advantages.  As 
long  as  other  Powers  were  loaning  money  to  China,  and  standing 
sponsor  for  her  independence  and  integrity,  and  urging  her  to 
purchase  arms  and  ammunition,  war  ships  and  other  implements 
of  defense,  this  problem  became  a  nightmare  to  Japan  from  the 
political  viewpoint  alone,  as  her  only  chance  to  maintain  her  hold 
in  Manchuria,  meant  that  she  would  have  to  fight  for  it.  The 
question  of  the  extension  of  the  lease  also  seriously  interfered  with 
Japan's  economic  progra-m  in  Manchuria,  for  after  the  first  few 
loans  secured  on  the  railway,  she  found  it  increasingly  difficult  to 
persuade  financiers  to  advance  further  funds,  because  of  the  short 
unexpired  time  of  the  lease.  This  point  reached  a  climax  five 
years  ago  (1910)  when  her  overtures  for  a  large  loan  secured  on 
the  railway  were  turned  down  in  the  international  money  markets.'^ 

In  the  final  treaty  of  1915  the  demand  for  these  lease 
extensions  was  granted  in  substantially  the  terms  in 
which  they  were  demanded.  As  the  matter  now  stands, 
therefore,  *  *  the  date  for  restoring  the  South  Manchurian 
Railway  to  China  shall  fall  due  in  the  ninety-first  year  of 
the  Republic  or  2002.  The  terms  of  the  Antung-Mukden 
Railway  will  expire  in  2007.'* 

It  is  to  be  observed  that  the  cancellation  of  the  rights 
of  China  to  purchase  in  1938  the  South  Manchuria  Rail- 
way had  not  been  asked  in  the  original  demands. 

By  Article  2  of  Group  II,  as  originally  presented,  Japa- 
nese subjects  were  to  have  the  right  to  lease  or  own  land 

"  "  Analysis  of  the  China-Japanese  Treaties,"  p.  23.  This  is  a  pamphlet 
by  the  editor  of  the  Far  Eastern  Review. 


THE   JAPANESE  IN   MANCHURIA  341 

in  South  Manchuria  and  Eastern  Inner  Mongolia  for 
erecting  buildings  for  trade,  manufacture,  or  farming. 
It  will  be  observed  that  in  the  revised  demands  the  words 
*'  lease  or  own  "  were  changed  to  "  lease  or  purchase  " 
and  in  the  resulting  treaty  only  the  right  to  lease  was 
granted  and  this  right  restricted  to  South  Manchuria. 

By  Article  3  of  the  group  in  its  original  form,  Japanese 
subjects  were  to  be  free  to  reside  and  travel  and  engage 
in  business  and  manufacture  of  any  kind  whatsoever  not 
only  in  South  Manchuria  but  in  Eastern  Inner  Mongolia. 
In  their  revised  form,  these  rights  were  not  extended  to 
Mongolia  and  a  paragraph  was  added  that  the  Japanese 
subjects  availing  themselves  of  the  rights  concerned 
should  be  required  to  register  their  passports  with  the 
local  authorities  and  **  submit  to  police  laws  and  ordi- 
nances and  tax  regulations,  which  are  approved  by  the 
Japanese  Consul." 

These  provisions  of  Article  3  deserve  some  comment. 
In  the  "  Official  Statement  Respecting  the  Sino- Japanese 
Negotiations,"  issued  by  the  Chinese  Government,  it  is 
said : 

The  demand  by  Japan  for  the  right  of  her  subjects  in  South 
Manchuria  to  lease  or  own  land,  and  to  reside  and  travel,  and  to 
engage  in  business  or  manufacture  of  any  kind  whatever,  was 
deemed  by  the  Chinese  Government  to  obtain  for  Japanese  subjects 
in  this  region  a  privileged  status  beyond  the  terms  of  the  treaties 
existing  between  the  two  nations,  and  to  give  them  a  freedom  of 
action  which  would  be  a  restriction  of  China's  sovereignty  and  a 
serious  infringement  of  her  administrative  rights.  Should  Japan- 
ese subjects  be  granted  the  right  of  owning  land,  it  would  mean 
that  all  the  landed  property  in  the  region  might  fall  into  their 
hands,  thereby  endangering  China's  territorial  integrity.^^     More- 

"  Japan  was  asking  for  something  that  she  has  never  been  willing  freely 


U2      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

over,  residence  in  the  interior  was  incompatible  with  the  existence 
of  extraterritoriality,  the  relinquishment  of  which  is  necessary  to 
the  actual  enjoyment  of  the  privilege  of  inland  residence,  as  evi- 
denced in  the  practice  of  other  nations. 

Japan's  unconditional  demand  for  the  privilege  of  inland  resi- 
dence accompanied  with  a  desire  to  extend  extraterritoriality  into 
the  interior  of  China  and  to  monopolize  all  the  interests  in  South 
Manchuria,  was  also  palpably  irreconcilable  with  the  principle  of 
the  Open  Door.'' 

China,  therefore,  made  several  counter-proposals  upon 
these  points,  as,  for  example,  the  opening  of  more  places 
in  South  Manchuria  to  international  trade  and  the  estab- 
lishment of  joint  Sino-Japanese  reclamation  companies. 
These  being  rejected  by  the  Japanese  representatives, 
China  proposed  to  give  to  Japanese  subjects  the  right  of 
inland  residence  with  the  proviso  that  those  outside  the 
trading  ports  should  observe  Chinese  police  regulations 
and  pay  taxes  in  the  same  manner  as  Chinese,  and  that 
civil  and  criminal  cases  involving  such  Japanese  should 
be  tried  by  Chinese  courts,  the  Japanese  consul  attending 
merely  to  watch  the  proceedings.  This  suggestion,  it  was 
declared,  was  not  an  innovation  but  similar  to  the  modus 
operandi  then  in  force  as  regards  Korean  settlers  in 
inland  districts  in  the  Chientao  region.'^    This  proposi- 

to  grant  within  her  own  borders.  Of  course  the  grantin{»  of  the  right  by 
China,  with  its  greatly  weaker  and  less  efficient  administrative  control, 
would  be  much  more  dangerous  to  herself  than  it  would  be  to  a  country 
like  Japan  with  a  strongly  centralized  and  administratively  efficient 
political  organization. 

**  This  would  be  true  so  far  as  .Japanese  were  given  or  claimed  exclusive 
rights  in  Manchuria.  It  would  not,  of  course,  be  true  in  so  far  as,  under 
the  operation  of  the  most-favored-nation  principle,  the  nationals  of  the 
other  Treaty  Powers  become  entitled  to  the  rights  granted  to  the  Japanese. 

**  For  the  agreement  of  September  4,  1909,  concerning  the  Chientao 
Region,  see  MacMurray,  Xo.  1909/10. 


THE  JAPANESE  IN  MANCHUKIA  343 

tion  the  Japanese  rejected,  as  they  did  other  alternatives 
which  the  Chinese  offered.  At  the  request  of  the  Japa- 
nese the  Chinese  agreed  to  change  the  term  *'  police  law 
and  ordinances  '*  to  the  milder  term  **  police  rules  and 
regulations  "  to  which  the  Japanese  settlers  were  to  be 
amenable. 

With  regard  to  the  extraterritorial  rights  which  the 
Japanese  Government  demanded  for  its  subjects  in  the 
interior,  it  is  to  be  remarked  that  even  the  police  rules 
and  regulations  to  which  they  are  to  conform,  are  to  be 
only  such  as  are  approved  by  the  Japanese  consul.  This, 
of  course,  goes  far  beyond  the  ordinary  doctrine  of  extra- 
territoriality as  elsewhere  applied  in  China.  The  same 
is  true  of  the  requirement  that  all  mixed  civil  cases 
between  Chinese  and  Japanese  relating  to  land,  that  is, 
irrespective  of  who  is  defendant  and  who  plaintiff,  should 
be  tried  by  delegates  of  both  nations  conjointly.  Finally, 
it  is  to  be  observed,  that  this  greatly  extended  extraterri- 
torial system  is  to  be  abolished  only  when  the  judicial 
system  of  the  region  is  completely  reformed.  Significant 
in  this  connection  is  the  proposition  contained  in  the 
**  Explanatory  Note  "  of  May  7,  1915,  that  the  matter  of 
the  approval  of  police  and  ordinances  and  local  taxes  by 
the  Japanese  consul  might  form  the  subject  of  a  secret 
agreement  between  the  two  countries.  That  the  agree- 
ment should  be  secret  at  least  suggests  the  possibility 
that  Japan  was  looking  forward  to  the  time  when  her 
nationals  in  South  Manchuria  and  Eastern  Inner  Mon- 
golia were  to  be  given  privileges  that  other  nationals 
were  not  to  enjoy. 

By  Article  4  of  the  group  as  originally  presented  China 
was  to  agree  **  to  grant  to  Japanese  subjects  the  right 


344      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  opening  the  mines  in  South  Manchuria  and  Eastern 
Mongolia.  As  regards  what  mines  are  to  be  opened,  they 
shall  be  decided  upon  jointly." 

In  this  form  the  demand  "  tended  "  as  the  Chinese 
Government  declared,  "  to  create  a  monopoly  for  Japa- 
nese subjects,  and,  therefore,  was  entirely  inconsistent 
with  the  principle  of  equal  opportunity.  The  Chinese 
Government  explained  that  they  could  not,  in  view  of  the 
treaty  rights  of  other  Powers,  agree  to  this  monopoly, 
but  they  readily  gave  their  acceptance  when  Japan  con- 
sented to  the  modification  of  the  demand  so  as  to  mitigate 
its  monopolistic  character. ' '  ^^ 

In  their  revised  form  this  engagement  was  to  be 
embodied  in  * '  an  exchange  of  notes  ' '  and  the  Chinese 
Government  was  to  agree  that  Japanese  subjects  should 
"  be  permitted  forthwith  to  investigate,  select,  and  then 
prospect  for  and  open  mines  '*  at  certain  designated 
places  in  South  Manchuria,  *'  apart  from  those  mining 
areas  in  which  mines  are  being  prospected  for  or 
worked. ' ' 

In  the  final  *'  Exchange  of  Notes  "  this  grant  was,  as 
we  have  seen,  phrased  as  follows : 

Japanese  subjects  shall,  as  soon  as  possible,  investigate  and  select 
mines  on  the  mining  areas  specified  hereinunder,  except  those  being 
prospected  for  or  worked,  and  the  Chinese  Government  will  then 
permit  them  to  prospect  or  work  the  same ;  but  before  the  mining 
regulations  are  definitely  settled,  the  practice  at  present  in  force 
shall  be  followed. 

By  Article  5  of  Group  II  of  the  Original  Demands 
China  was  to  agree  that  without  first  obtaining  the  con- 

"  Official  Statement  of  the  Chinese  Government  Respecting  the  Sino- 
Japanese  Negotiations. 


THE   JAPANESE  IN   MANCHURIA  345 

sent  of  the  Japanese  Government,  she  would  take  no 
action  with  regard  to  granting  permission  to  a  subject  of 
a  third  power  ' '  to  build  a  railway  or  to  make  a  loan  with 
a  third  Power  for  the  purpose  of  building  a  railway  in 
South  Manchuria  and  Eastern  Inner  Mongolia  ' ' ;  and 
the  same  should  be  true  ' '  wherever  a  loan  is  to  be  made 
with  a  third  Power  pledging  the  local  taxes  of  South 
Manchuria  and  Eastern  Inner  Mongolia  as  security.'* 

These  important  restrictions  upon  China's  freedom  of 
action  and  in  favor  of  Japanese  interests  were,  as  has 
been  seen,  somewhat  modified  in  the  revised  demands, 
and  in  the  note  exchanged  on  the  subject.  It  is,  however, 
highly  significant  that  Japan  should  have  demanded  of 
China  such  exclusive  rights  for  herself  in  South  Man- 
churia and  Eastern  Inner  Mongolia.  And  it  is  interesting 
to  compare  this  fact  with  the  statement  of  Sir  Edward 
Grey  to  Parliament,  earlier  quoted,^^  with  reference  to 
the  projected  Chinchow-Aigun  Eailway  that  **  if  Japan 
had  taken  up  the  line  of  stating  that  she  wished  to  have 
a  railway  monopoly  in  Manchuria,  that  would  have  been 
a  distinct  breach  of  the  open  door.  If  she  made  use  of 
her  position  there  by  giving  preferential  treatment  to  her 
own  people  as  against  others,  that  again  would  be  a  breach 
of  the  open  door." 

That  Japan's  demands  with  reference  to  Manchuria 
and  Eastern  Inner  Mongolia  were  in  violation  of 
America's  interpretation  of  the  open  door  principle  is 
sufficiently  plain,  and,  as  has  since  been  shown,  in  con- 
nection with  the  correspondence  relating  to  the  proposed 
new  banking  Consortium  for  lending  money  to  China,  not 

=•  p.  327. 


346      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

even  the  recognition  by  America  of  Japan's  **  Special 
Interests  ' '  has  carried  with  it,  in  the  mind  of  the  Govern- 
ment at  Washington,  the  admission  that  Japan's  pledges 
to  respect  the  open  door  principle  might  be  so  loosely 
interpreted  as  to  permit  her  to  make  upon  China  a 
demand  or  even  a  request  that  she,  Japan,  should  have 
the  rights  in  Manchuria  and  Mongolia  which  she  sought 
to  obtain  in  1915. 

By  Article  6  of  Group  II  Japan  demanded  that  the 
Chinese  Government  agree  that  the  Japanese  Govern- 
ment should  first  be  consulted  if  political,  financial  or 
military  advisors  or  instructors  in  South  Manchuria 
or  Eastern  Mongolia  were  employed.  In  the  revised 
demands  this  was  made  stronger,  but  limited  to  South 
Manchuria,  the  undertaking  being  that  Japanese  should 
be  employed  first.  In  the  exchange  of  notes  in  which  the 
agreement  was  finally  embodied,  it  is  stated  that  *  *  Here- 
after, if  foreign  advisors  or  instructors  on  political, 
financial,  military  or  police  matters  are  to  be  employed 
in  South  Manchuria,  Japanese  may  be  employed  first." 

By  the  final  article  (7)  of  the  original  Group  II,  the 
Chinese  Government  was  required  to  agree  that  the 
control  and  management  of  the  Kir  in- Changchun  Rail- 
way should  be  handed  over  to  the  Japanese  Government 
for  a  term  of  ninety-nine  years.  This  demand,  it  is  to  be 
observed,  involved  a  fundamental  change  in  existing  loan 
contracts  between  China  and  foreign  capitalists.  Origi- 
nally the  capital  of  this  road  was  half  Chinese  and  half 
Japanese.  The  change  demanded  would  therefore  have 
practically  operated  to  transfer  the  capital  originally 
held  by  the  Chinese  wholly  to  Japanese  control  and 
management.    In  the  revised  demands,  however,  consid- 


THE   JAPANESE  IN   MANCHUEIA  347 

erable  changes  were  made  upon  this  point,  and,  in  the 
final  treaty  the  language  is : 

Article  7.  The  Chinese  Government  agrees  speedily  to  make  a 
fundamental  revision  of  the  Kirin- Changchun  Railway  Loan  Agree- 
ment, taking  as  a  standard  the  provisions  in  railway  agreements 
made  heretofore  between  China  and  foreign  financiers.  When  in 
future,  more  advantageous  terms  than  those  in  existing  railway 
loan  agreements  are  granted  to  foreign  financiers  in  connection 
with  railway  loans,  the  above  agreement  shall  again  be  revised  in 
accordance  with  Japan's  wishes. 

In  a  later  chapter  reference  will  be  made  to  certain 
communications  which  the  United  States  made  to  Japan 
in  connection  with  her  Twenty-one  Demands. 

Chengchiatun  Incident  and  Resulting  Japanese  Demands. 

In  September,  1916,  there  came  a  further  official  exposi- 
tion of  the  desires  and  intentions  of  the  Japanese  Govern- 
ment in  Manchuria.  This  revelation  was  furnished  by 
the  demands  which  that  Government  pressed  upon  China 
because  of  an  alleged  wrong  done  to  its  nationals  in  a 
fracas  which  arose  in  January,  1916,  between  Chinese 
and  Japanese  soldiers  in  the  small  Manchurian  town  of 
Chengchiatun,  near  the  border  of  Mongolia. 

The  evidence  as  to  what  occurred  at  that  time  is 
conflicting,  but,  so  far  as  it  can  be  reduced  to  a  definite 
and  credible  basis  it  would  appear  that  the  Japanese 
soldiers  were  the  aggressors  and,  in  fact,  in  the  wrong 
throughout  the  trouble.  And,  in  this  connection,  it  may 
be  observed  that  Japan  had  no  treaty  or  other  legal  right 
to  have  soldiers  at  Chengchiatun  at  all.  For  the  purposes 
of  this  volume,  however,  the  important  fact  is  as  to  the 
demands  which  Japan  predicated  upon  this  event.  These, 
in  addition  to  the  requirements  that  the  general  com- 


348      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

manding  the  local  Chinese  division  of  troops  should  be 
punished,  the  officers  concerned  dismissed,  and  all  who 
took  a  direct  part  in  the  fracas  punished,  included  the 
demand  that  China  should  agree  *'  to  the  stationing  of 
Japanese  police  officers  in  places  in  South  Manchuria  and 
Eastern  Inner  Mongolia  where  their  presence  was  con- 
sidered necessary  for  the  protection  of  Japanese  sub- 
jects. China  also  to  agree  to  the  engagement  by  the 
officials  of  South  Manchuria  of  Japanese  police  ad- 
visors." In  other  words,  that  Japan  should  be  given  an 
indefinite  and  therefore  general  right  to  participate  in 
the  policing  of  whatever  portions  of  South  Manchuria 
and  Eastern  Inner  Mongolia  she  might  think  desirable.*^ 
But  this  was  not  all.  The  following  * '  desiderata  '  *  were 
also  presented: 

1.  Chinese  troops  stationed  in  South  Manchuria  and  Eastern 
Inner  Mongolia  to  employ  a  certain  number  of  Japanese  military 
officers  as  advisors. 

2.  Chinese  Mihtary  Cadet  Schools  to  employ  a  certain  number 
of  Japanese  military  officers  as  instructors. 

3.  The  Military  Governor  of  Mukden  to  proceed  personally  to 
Port  Arthur  to  the  Japanese  Military  Governor  of  Kwantung  to 
apologize  for  the  occurrence  and  to  tender  similar  apologies  to  the 
Japanese  Consul  General  in  Mukden. 

4.  Adequate  compensa/tions  to  be  paid  by  China  to  the  Japanese 
sufferers  and  to  the  families  of  those  killed. 

These  demands  and  desiderata,  it  is  to  be  observed, 
were  based  upon  facts  as  alleged  by  the  Japanese,  and 
not  as  determined  by  any  thorough  or  bi-lateral  examina- 
tion as  to  who  had  been  in  the  wrong. 

"See  especially  the  liote  Verbale  handed  by  the  Japanese  Minister  to 
the  Chinese  Minister  of  Foreign  Affairs,  given  in  MacMurray,  note  to  No. 
1917/2.  See  also,  ante,  p.  80,  for  discussion  of  Japan's  claim  of  right  to 
establish  "  police  boxes  "  in  China. 


THE   JAPANESE  IN   MANCHUEIA  349 

Replying  to  these  demands,  the  Chinese  Government, 
on  January  12, 1917,  said  that  it  was  unwilling  to  employ 
Japanese  instructors  in  its  military  cadet  schools ;  that  a 
Japanese  military  advisor  was  already  employed  in  the 
office  of  the  Military  Governor  of  Mukden,  and  that,  in 
regard  to  the  stationing  of  Japanese  police  officers,  the 
agreement  of  May  25,  1915,  had  provided  that  all  Japa- 
nese subjects  in  South  Manchuria  and  in  Eastern  Inner 
Mongolia  should  ''  submit  to  the  police  laws  and  ordi- 
nances and  taxation  of  China, ' '  and  that,  therefore,  ques- 
tions of  extraterritorial  rights  were  thus  provided  for. 
It  was  pointed  out  that  although  the  Japanese  Minister 
might  give  assurance  that  the  Japanese  police  officers,  if 
allowed  to  function  in  Chinese  territory,  would  not 
infringe  the  rights  of  the  Chinese  police  and  of  the  local 
Chinese  administration,  both  the  spirit  and  form  of 
Chinese  sovereignty  would  be  impaired  and  occasion 
given  for  misunderstanding  upon  the  part  of  the  Chinese 
people  and  to  the  detriment  of  friendly  feelings  between 
the  two  peoples. 

At  this  time  the  Japanese  already  had  certain  police 
stations  in  Manchuria,  and  as  to  these  the  Chinese 
Government  pointed  out  that  they  had  repeatedly,  but 
unsuccessfully,  protested;  and  that,  in  fact,  it  was  the 
presence  of  the  Japanese  police  at  Chengchiatun,  far 
from  the  Railway  Zone  (where  alone  the  Japanese  had 
even  a  color  of  right  to  maintain  armed  forces)  that  had 
been  responsible  for  the  matter  at  issue. 

Finally,  however,  the  Chinese  Government,  without 
admitting  that  its  nationals  had  been  in  the  wrong,  felt 
constrained  to  the  following  stipulations: 

1.    The  General  Commanding  the  28th  Division  to  be  reproved. 


350      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

2.  The  Chinese  military  officers  responsible  for  this  incident  to 
be  punished  according  to  law.  If  the  law  provides  for  severe  pun- 
ishment such  punishment  will  be  inflicted. 

;i  An  official  proclamation  to  be  issued  in  the  districts  where 
there  is  mixed  residence  for  the  information  of  the  soldiers  and 
the  people  in  general  to  the  effect  that  Japanese  soldiers  and  sub- 
jects shall  be  accorded  considerate  treatment. 

4.  The  Tuchun  of  Fengtien  Province  to  express  in  an  appro- 
priate way  his  regret  to  the  Governor  of  Kwantung  and  the  Japan- 
ese Consul-General  in  Mukden,  when  they  are  together  at  Port 
Arthur,  but  tlie  method  of  expression  is  left  to  the  discretion  of  the 
.said  Tuchun. 

5.  A  solatium  of  $500  is  to  be  given  to  the  Japanese  merchant, 
Yoshimoto.'* 

Russo-Japanese  Treaty  of  July  3,  1916.  In  1916  Japan 
sought  further  to  strengthen  its  position  in  Manchuria 
by  coming  to  a  more  definite  understanding  with  Russia 
than  had  been  represented  by  the  treaty  of  July  4, 1910.*® 
In  that  treaty  the  two  governments  had  agreed  to  co- 
operate in  the  maintenance  of  the  status  quo  in  Man- 
churia. In  this  new  agreement  of  July  3,  1916,*'^  as 
appears  in  the  text  which  follows,  the  object  of  the  High 
Contracting  Parties  is  '  *  the  defense  of  their  Far  Eastern 
territorial  rights  and  special  interests." 

The  Imperial  Governments  of  Japan  and  Eussia,  having  resolved 
by  united  efforts  to  maintain  permanent  peace  in  the  Far  East,  have 
agreed  upon  the  following : 

"For  an  account  of  the  facts  and  significance  of  the  Chengchiotun 
Affair,  by  the  well-known  authority,  Mr.  Putnam  Weale,  see  The  Peking 
Gasette,  September  4,  1916.  For  oflBcial  documents  see  the  Gazette,  Janu- 
ary 29,  1917;  also  MacMurray,  No.  1917/2. 

"  See  ante,  p.  328. 

•  MacMurray,  No.  1916/9. 


THE  JAPANESE  IN  MANCHUEIA  351 

Article  I.  Japan  will  not  be  a  party  to  any  arrangement  or 
political  combination  directed  against  Russia. 

Russia  will  not  be  a  party  to  any  agreement  or  political  com- 
bination directed  against  Japan. 

Article  II.  In  the  event  that  the  territorial  rights  or  the  spe- 
cial interests,  in  the  Far  East,  of  one  of  the  Contracting  Parties, 
recognized  by  the  other  Contracting  Party,  should  be  menaced, 
Japan  and  Russia  will  confer  in  regard  to  the  measures  to  be  taken 
^\'ith  a  view  to  the  support  or  cooperation  to  be  given  each  other  in 
order  to  safeguard  and  defend  those  rights  and  interes-ts. 

Commenting  upon  this  treaty  Mr.  K.  K.  Kawakami, 
one  of  Japan's  quasi-official  spokesmen  in  America,  says 
that  it  can  hardly  be  said  to  constitute  an  alliance  since, 
unlike  the  Anglo-Japanese  Alliance,  it  does  not  call 
specifically  for  the  rendering  of  mutual  armed  assistance. 
He  finds  its  chief  significance  in  its  wide  territorial  appli- 
cation :  *  *■  while  it  is  obvious  that  the  new  covenant  aims 
chiefly  to  secure  the  respective  interests  of  the  contract- 
ing parties  in  Manchuria  and  Mongolia,  its  scope  is  not 
restricted  to  these  two  countries  but  covers  the  entire 
East." 

Mr.  Kawakami,  employs  the  following  rather  frank 
reasoning  to  support  his  view  that  the  interests  of 
America  are  not  affected  by  the  new  treaty.  "  Long 
before  the  conclusion  of  the  new  pact,  "he  says,  **  America 
was  unmistakably  given  to  understand  that  no  enterprise 
or  investment,  having  political  or  commercial  ^^  impor- 
tance, could  be  launched  in  Manchuria  without  due  recog- 
nition of  the  preponderating  interest  held  by  Eussia  and 
Japan  in  that  territory.  This  is,  of  course,  not  to  say 
that  both  Japan  and  Russia  are  anxious  to  bar  out  Amer- 

"  Italics  the  author's. 


352      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ican  capital  or  enterprise  from  Manchuria.  It  simply 
means  that  America  must  not  ignore  the  peculiar  posi- 
tion occupied  by  Russia  and  Japan,  but  must  take 
it  into  consideration  in  launching  any  scheme  which  will 
seriously  affect  the  political  and  economic  status  of 
Manchuria.  That  principle  was  fairly  well  established 
when  Japan  and  Russia  opposed  the  neutralization  of  the 
Manchuria  railways  proposed  by  Secretary  Knox,  and 
when  they  combatted  the   Chino-American  project  to 

construct  a  railway  of  702  miles  between  Chinchow  and 
Aigun."42 

Secret  Russo-Japanese  Military  Alliance  of  1916.     We 

now  know,  however,  since  the  publication  of  secret  diplo- 
matic documents  by  the  Russian  Revolutionists  in  1917, 
that  the  published  treaty  of  July  3,  1916,  was  but  one  of 
two  compacts  entered  into  at  the  time  by  Japan  and 
Russia.  This  secret  treaty,  which  indicated  that  there 
had  been  other  secret  pacts,  was  in  the  following  terms : 

The  Russian  Imperial  Government  and  the  Japanese  Imperial 
Government,  aiming  to  strengthen  the  firm  friendship  between 
them,  established  through  the  secret  agreements  of  July  17-30, 
1907,  June  21-July  4,  1910,  and  June  25-July  8,  1912,  have  agreed 
to  supplement  the  aforesaid  secret  agreements  with  the  following 
articles : 

Article  1.  Both  the  High  Contracting  Parties  recognize  that 
the  vital  interests  of  one  and  the  other  of  them  require  the  safe- 
guarding of  China  from  the  political  dominion  of  any  third  Power 
whatsoever,  having  hostile  designs  against  Russia  or  Japan;  and 

**  Japan  in  World  Politics,  p.  296.  Here  is  a  frank  but  substantially 
correct  statement  of  how  far  away,  in  Japan's  view,  the  status  in  Man- 
churia had  developed  from  that  provided  for  in  the  Portsmouth  Trea<ty 
of  1905. 


THE  JAPANESE  IN  MANCHURIA  353 

therefore  mutually  obligate  themselves  in  the  future  at  all  times 
when  circumstances  demand,  to  enter  with  open-hearted  dealings, 
based  on  complete  trust,  in  order  to  take  necessary  measures  with 
the  object  of  preventing  the  possibility  of  occurrence  of  said  state 
of  affairs. 

Article  2.  In  the  event,  in  consequence  of  measures  taken  by 
mutual  consent  of  Eussia  and  Japan,  on  the  basis  of  the  preceding 
article,  a  declaration  of  war  is  made  by  any  third  Power,  contem- 
plated by  Article  1  of  this  agreement,  against  one  of  the  Contract- 
ing Powers,  the  other  Party,  at  the  first  demand  of  its  ally,  must 
come  to  its  aid.  Each  of  the  High  Contracting  Parties  herewith 
covenants,  in  the  event  such  a  condition  arises,  not  to  conclude 
peace  with  the  common  enemy,  without  preliminary  consent  there- 
for from  its  ally. 

Article  3.  The  conditions  under  which  each  of  the  High  Con- 
tracting Parties  will  lend  armed  assistance  to  the  other  side,  by 
virtue  of  the  preceding  article,  as  well  as  the  means  by  which  such 
assistance  shall  be  accomplished,  must  be  determined  in  common 
by  the  corresponding  authorities  of  one  or  the  other  contracting 
parties. 

Article  4.  It  is  requisite  to  have  in  view  that  neither  one  nor 
the  other  of  the  High  Contracting  Parties  must  consider  itself 
bound  by  Article  2  of  this  agreement  to  lend  armed  assistance  to 
its  ally,  unless  it  be  given  guarantees  by  its  allies  that  the  latter 
will  give  it  assistance  corresponding  in  character  to  the  importance 
of  the  approaching  conflict.*^ 

Article  5.  The  present  agreement  shall  have  force  from  the 
time  of  its  execution,  and  shall  continue  to  be  in  force  until  July 
1-14,  of  the  year  1921. 

In  the  event  the  other  of  the  High  Contracting  Parties  does  not 
deem  it  necessary  twelve  months  prior  to  the  end  of  said  period,  to 
declare  its  unwillingness  to  continue  the  present  agreement  in 
force,  then  the  said  agreement  shall  continue  in  force  for  a  period 

•  Query :  Was  the  reference  here  to  the  aid  that  Japan  might  or  might 
not  obtain  from  Great  Britain  in  conformity  with  the  obligations  imposed 
by  the  Anglo- Japanese  Alliance? 

23 


354      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  one  year  after  the  declaration  of  one  of  the  Contracting  Parties 
disclaiming  the  said  agreement. 

Article  6.  The  present  agreement  must  remain  profoundly 
secret  except  to  both  the  High  Contracting  Parties.** 

Mr.  Millard,  commenting  upon  this  secret  treaty  has 
this  to  say :  *  *  It  was  apparently  made  without  the  knowl- 
edge of  the  other  Allied  Powers.  It  can  scarcely  be 
assumed,  however,  that  the  *  third  power  '  against  which 
this  treaty  nominally  was  intended  to  protect  the  interests 
of  Japan  and  Russia  in  China  was  one  of  the  European 
allies  of  Japan  and  Russia.  That  construction  would 
convict  the  nations  that  made  it  of  downright  under- 
handedness,  or  by  logical  inference  of  an  expectation  of 
betrayal  of  them  by  some  of  their  allies.  It  was  not 
directed  against  a  nation  in  the  Central  Alliance :  in  that 
case  this  treaty  would  be  unnecessary,  for  Japan  and 
Russia  already  were  allied  and  at  war  against  the  nations 
of  the  Central  Alliance.  There  is  no  room  for  doubt  as 
to  the  identity  of  the  *  third  power  '  mentioned  in  the 
treaty.     It  is  directed  at  the  United  States. ' '  ^^ 

Additional  Railway,  Mining,  and  Other  Rights  in  Man- 
churia Acquired  by  Japan.  Mention  has  already  been 
made  of  the  fact  that  in  addition  to  the  railway  from 
Changchun  (Kwangchengtze)  to  Dalny  and  Port  Arthur, 
its  branches,  and  appertaining  coal  mines  and  other  rights 
which  she  obtained  from  Russia  by  the  Portsmouth 
Treaty  of  Peace  of  1905,  Japan  later  obtained  the  right 
to  transform  into  a  commercial  road  the  light  military 

"MacMurray,  1916/9. 

*  Democracy  and  the  Eastern  Question,  p.  67.  It  is,  perhaps,  significant 
that  this  alliance  was  timed  to  last  just  a  day  beyond  the  Anglo-Japanese 
Alliance. 


THE  JAPANESE  IN  MANCHUEIA  355 

line  which  she  had  built  from  the  Korean  border  at 
Antung  to  Mukden.  By  still  other  agreements  with 
China,  Japan  has,  from  time  to  time,  secured  still  other 
railway,  mining  and  other  concessions  in  the  Manchurian 
province,  some  of  which  deserve  special  mention. 

Hsinmin-Mukden  and  Kirin-Changchun  Railways.     By 

an  agreement  of  April  15,  1907,^®  between  China  and 
Japan,  it  was  provided  that  the  Chinese  Government 
should  purchase  the  Hsinmin-Mukden  Eailway,  that  had 
been  constructed  by  Japan,  and  give  to  it  the  status  of 
the  lines  that  had  been  built  by  China  herself,  and  that 
one-half  of  the  capital  needed  for  that  part  of  the  line 
east  of  the  Liao  River  should  be  borrowed  from  the  South 
Manchuria  Railway  Company.  Also  that  China,  being 
about  to  construct  a  railway  from  Kirin  to  Changchun, 
should  borrow  one-half  of  the  capital  needed  from  the 
same  company.  As  security  for  these  loans  the  proper- 
ties of  the  roads  and  their  earnings  were  to  be  pledged. 
It  was  also  agreed  that  if  the  Kirin-Changchun  line 
should  later  build  branch  lines  or  extensions,  and  if  there 
should  be  lack  of  available  capital  on  the  part  of  the 
Chinese  Government,  application  for  the  amounts  needed 
would  be  made  to  the  South  Manchuria  Railway  Com- 
pany. During  the  period  of  the  loans,  18  and  25  years, 
respectively,  the  Engiiieer-in-Chief  was  to  be  a  Japanese, 
and  there  was  also  to  be  a  Japanese  as  accountant  who 
should  have  "  entire  responsibility  for  the  arrangement 
and  oversight  of  the  various  accounts  of  the  railways," 
but  in  his  supervision  of  receipts  and  expenditures  to 
consult   and   act  with  the   Director-General.    If   there 

**MacMurray,  No.  1907/3. 


356      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

should  be  default  in  the  payment  of  principal  or  interest, 
the  roads  were  to  be  handed  over  to  the  South  Manchuria 
Railway  Company  until  the  default  should  be  made  good. 

Mining  and  Railway  Rights  Obtained  in  1909.     By  an 

agreement  of  September  4,  1909,*'^  China  engaged  that 
should  she  undertake  the  construction  of  a  railway  be- 
tween Hsinmin  and  Fakumen  she  would  "  arrange  pre- 
viously with  the  Government  of  Japan ' ' ;  that  the  rail- 
way between  Tashichao  and  Yinkow  should  be  deemed  a 
branch  line  of  the  South  Manchuria  Railway  and  be 
delivered  up  by  Japan  at  the  expiration  of  the  term  of 
concession  of  the  main  line,  and  that  this  line  should  be 
extended  to  the  port  of  Yinkow.  As  regarded  coal  mines, 
the  agreement  provided  that  the  mines  at  Fashun  and 
Yentai  might  be  worked  by  the  Japanese  Government, 
that  Government  undertaking  to  respect  the  full  sover- 
eignty of  China  and  to  pay  to  the  Chinese  Government  a 
tax  upon  all  coal  mined,  the  amount  of  the  tax  to  be 
separately  arranged  upon  the  basis  of  the  lowest  tariff 
for  coals  produced  in  any  other  places  of  China.  It  was 
also  agreed  that  upon  coal  exported  the  lowest  tariff  of 
export  duty  for  any  other  mines  should  be  applied. 
Article  4  of  the  agreement  read:  "  All  mines  along  the 
Antung-Mukden  Railway  to  the  main  line  of  the  South 
Manchuria  Railway,  excepting  those  at  Fushun  and 
Yentai,  shall  be  exploited  as  joint  enterprises  of  Japa- 
nese and  Chinese  subjects." 

Upon  being  asked  by  the  American  Government 
whether  this  agreement  involved  a  monopoly  of  the  right 
to  open  mines  in  the  territories  concerned,  to  the  exclu- 

♦"MacMurray,  No.  1909/9. 


THE  JAPANESE  IN  MANCHUEIA  357 

sion  of  Americans  or  others,  the  Japanese  Minister  of 
Foreign  Affairs  assured  the  American  Ambassador  at 
Tokyo  that  the  agreement  "  does  not  intend  an  exclusive 
claim  to  mines  in  Manchuria ;  that  Japan  will  not  oppose 
a  concession  by  China  to  any  third  party  finding  minerals 
within  the  territory  in  question,  and  that  it  was  only 
designed  so  that  neither  China  nor  Japan  should  operate 
independently  of  the  other. ' ' 

On  November  18,  1909,  the  Chinese  Government 
informed  the  American  Charge  d'Affaires  that  it  was  the 
* '  understanding  of  the  Imperial  Chinese  Government  that 
the  reference  in  the  said  agreement  to  joint  Chinese- 
Japanese  exploitation  of  mines  along  the  two  railways 
mentioned  does  not  involve  a  monopoly  of  the  rights  and 
privileges  of  opening  mines  in  the  designated  territory, 
nor  confer  any  exclusive  rights  to  mines  therein  upon 
Japanese  subjects,  but  the  mines  in  the  territory  men- 
tioned may  with  the  consent  of  the  Chinese  Government 
be  exploited  by  third  parties  also." 

Again,  on  November  25,  1909,  the  Japanese  Govern- 
ment assured  the  American  Government  that  the  collieries 
at  Fushun  and  Yentai  were  two  of  the  mines  assigned 
and  transferred  to  Japan  by  the  Portsmouth  Treaty,  and 
that  the  new  agreement  carried  no  new  concession  but 
merely  recognized  the  already  granted  exclusive  right  of 
Japan  to  work  them.  '*  The  general  principles  referred 
to  in  the  agreement  in  question,"  it  was  declared,  "  which 
lacking  the  necessary  confirmation  of  the  governments 
concerned,  remained  for  the  time  being  ineffective,  relate 
exclusively  to  known  mines — only  a  few  in  number — 

which  have  been  actually  located  by  Japanese The 

provisions  of  September  4  last,  in  reference  to  joint 


358      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

exploitation  of  mines  along  the  said  railway  do  not  and 
were  not  intended  in  any  way  or  to  any  extent  to  involve 
a  monopoly  of  tlie  right  to  discover,  open,  and  operate 
mines  in  Manchuria,  to  the  exclusion  of  American  citizens, 
or  any  other  persons."*® 

Five  Additional  Japanese  Railways  in  Manchuria.     On 

October  5,  1913,  Japan,  by  an  exchange  of  notes  *®  with 
China,  made  an  arrangement  for  the  lending  to  the  Gov- 
ernment of  China  of  funds  by  Japanese  capitalists  for 
the  building  of  the  following  railways  in  Manchuria  and 
Mongolia : 

1.  From  Ssupingkai,  via  Chengchiatun,  to  Taonanfu. 

2.  From  Jehol  to  Taonanfu. 

3.  From  Kaiyuan  to  Hailungcheng. 

4.  From  the  Changchun  station  of  the  Kirin-Chang- 
chun  Railway,  across  the  South  Manchuria  Railway  line, 
to  Taonanfu. 

5.  From  Hailung  to  Kirin. 

The  public  announcement  that  these  loans  had  been 
arranged  was  not  made  until  October  2,  1918,  when  the 
Japanese  Government  gave  out  an  authoritative  state- 
ment. In  this  statement  the  Kaiyuan-Hailung  and 
Hailung-Kirin  lines  are  spoken  of  as  a  single  concession, 
and,  for  the  first  time  there  is  mention  made  of  a  line 
'*  from  a  point  on  the  Taonanfu- Jehol  railway  to  a  sea- 
port." 

*■  U.  8.  For.  Rels.,  1909,  pp.  116-124,  For  agreement  between  Japan  and 
China  concerning  mines  and  railways  in  Manchuria,  and  also  with  the 
Japanese  firm  of  Okura  &  Co.  regarding  the  Penhsihu  mine,  see  Mac- 
Murray,  1909/9  and  notes. 

'•MacMurray,  No.  1913/9. 


THE  JAPANESE  IN  MANCHURIA  359 

It  is  practically  certain  that  the  seaport  referred  to 
in  the  last  named  project  will  be  either  Chinchow  or 
Hulutao,  but  more  likely  Hulutao,  which  is  just  south  of 
Chinchow  and  only  seven  and  a  half  miles  from  the 
Peking-Mukden  Railway  and  connected  with  it  by  a 
branch  line.  Enough  information  has  become  public  to 
make  it  reasonably  certain  that  Japan  is  seeking  from 
China  the  right  to  build  a  railway  from  Jehol  to  Peking. 
If  this  is  done  Japan  will  have  a  line  parallelling  the 
Peking-Mukden  railway  between  Peking  and  Hulutao  or 
Chinchow.  In  fact,  Japan  will  then  have  railway  com- 
munication from  Korea  to  China's  capital  over  lines 
wholly  controlled,  operated,  and  policed  by  herself. 

The  political,  as  well  as  the  commercial  importance  of 
these  projected  Japanese  lines  in  South  Manchuria  is 
thus  seen.  Commenting  on  the  importance  of  the  harbor 
of  Hulutao,  the  well  informed  Far  Eastern  Review  for 
November,  1918,  has  the  following  to  say : 

As  a  harbor  Hulutao  has  a  good  natural  depth  of  water — thirty 
feet  at  low  tide — with  a  rise  of  eight  or  ten  feet  at  spring  tides.  It 
has  the  advantage  too,  that  it  seldom  freezes  sufficiently  to  prevent 
steamers  operating,  observations  showing  that  it  is  no  unusual  con- 
dition for  open  water  to  be  at  Hulutao  when  there  are  six  inches  of 
ice  at  Chinwangtao.  The  Chinese  authorities  at  Mukden  began 
improvement  works  to  develop  the  port  in  October,  1910,  but  by  the 
following  October  lack  of  funds  and  the  outbreak  of  the  revolution 
against  the  Manchus  terminated  work.  In  that  year,  however,  con- 
siderable progress  had  been  made  with  the  breakwater,  etc., — ^but 
v/ork  was  never  resumed.  It  is  known  that  had  the  Chinese 
authorities  proceeded  with  the  improvement  of  the  port  it  would, 
next  to  Tientsin,  have  developed  into  the  most  important  Chinese 
harbor  in  North  China,  and  probably  would  have  been  a  strong 
competitor  with  Dalny.  Japanese  engineers  have  frequently  in- 
spected the  port  and  it  has  several  times  been  reported  that  Japan 


360      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

has  had  an  eye  on  its  future  control.  It  need  not  then  occasion 
any  surprise  to  hear  later  on  that  Japan  has  made  arrangements 
with  the  present  government  in  Peking  to  conclude  the  work  and 
utilize  the  port  as  a  sea  terminal  for  a  line  "  from  a  point  on  the 
Taonanfu-Jehol  Railway."  With  the  port  developed  and  in  her 
control,  and  lines  running  therefrom  to  Eastern  Inner  Mongolia 
as  planned,  Japan  would  be  in  a  strong  commercial  position  as  far 
as  Manchuria  is  concerned,  for  she  would  then  have  direct  avenues 
from  Dalny  and  Hulutao  to  cover  a  great  territory,  the  importance 
of  which  may  be  appreciated  at  a  glance  by  looking  at  the  map. 
It  will  be  seen,  then,  that  the  territory  embraced  in  the  Chinchow- 
Aigun  Railway  (the  American  project  blocked  by  Russia  and 
Japan)  is  now  completely  taken  up,  with  the  exception  of  a  small 
strip  between  Taonaiifu  and  Tsitsihar,  the  Chinese  having  granted 
the  southern  section  to  the  Japanese  and  the  northern  to  the  Rus- 
sians, both  contracts  having  been  granted  without  any  reference  to 
American  claims. 

Ssupingkai-Chengchiatun     Railway    Loan     Agreement. 

The  loan  agreement  for  the  building  of  the  Ssupingkai- 
Chengchiatun  Railway  was  signed  December  2,  IQIS,^** 
the  parties  to  it  being  the  Yokohama  Specie  Bank  and 
the  Government  of  China.  This  agreement  provided  that 
the  Chinese  Government  should  authorize  the  bank  to 
issue  a  forty-year,  5  per  cent.,  gold  loan  of  five  million 
yen,  the  proceeds  to  be  expended  for  the  building  of  the 
road,  and  to  be  secured  by  a  lien  upon  all  movable  and 
immovable  property  belonging  to  the  railway.  The 
Chinese  Government  was  to  guarantee  the  regular  pay- 
ment of  both  the  principal  and  interest  of  the  loan,  and 
in  case  the  revenue  of  the  road  should  prove  insufficient 
to  meet  these  payments,  to  adopt  the  necessary  measures 
to    ensure    their    payment    from    other    sources.    The 

••  MacMurray,  No.  1915/14. 


THE  JAPANESE  IN  MANCHURIA  361 

Director-General  of  the  railway,  in  agreement  with  the 
bank,  was  to  appoint  a  Japanese  as  chief  accountant  who 
was  to  have  charge  of  all  revenues  and  expenditures  of 
the  road  during  the  term  of  the  loan.  Tl>«  building  and 
management,  it  was  provided,  should  be  wholly  in  the 
hands  of  the  Chinese  Government  who  would  appoint  the 
Director-General.  But  he,  in  agreement  with  the  bank, 
was  to  appoint  a  Japanese  subject  as  Chief  Engineer, 
who,  in  turn,  was  to  have  authority  with  the  consent  of 
the  Director-General  and  Managing  Director  to  make  all 
appointments  and  dismissals  with  regard  to  minor  posi- 
tions. A  Japanese  subject  was  also  to  be  the  Traffic 
Manager  of  the  road.  The  functions  of  the  Chief  Engi- 
neer were  to  cease  with  the  completion  of  the  road,  but 
the  Director-General  was  then  to  appoint  a  Japanese 
Engineer  to  supervise  the  engineering  department  under 
the  orders  of  the  Director-General  and  Managing 
Director. 

In  the  construction  and  operation  of  the  road,  building 
materials,  rolling  stock,  and  other  articles  of  Japanese 
manufacture  were  to  be  given  the  preference. 

If,  in  the  future,  the  line  should  be  extended,  or 
branches  built,  and  foreign  funds  needed  for  the  purpose, 
the  option  of  supplying  them  was  to  be  offered  to  the 
Japanese  Bank. 

These  terms  were  substantially  those  of  the  standard 
railway  loan  agreements  that  have  been  made  by  China 
with  the  British,  French,  and  American  banks.  Their 
significance  to  China  was,  however,  different,  or,  at  least, 
might  become  different,  due  to  the  fact  that  the  Yokoha- 
ma Specie  Bank  is  virtually  an  agency  of  the  Japanese 
Government,  and,  therefore,  may  possibly  use  the  official 


362      FOKEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

pressure  of  that  Government  to  obtain  an  eventual  modi- 
fication of  the  terms. 

Railway  Loan  Agreements  of  September  28,  1918.     On 

September  28, 1918,  was  signed  a  preliminary  loan  agree- 
ment between  the  Government  of  China  and  a  syndicate 
of  Japanese  banks  ^^  with  regard  to  supplying  the  funds 
for  the  construction  of  the  other  railroads,  concessions 
for  the  construction  of  which  had  been  obtained  by  Japan 
in  1913." 

The  route  of  the  railway  from  a  point  on  the  Jehol- 
Taonan  line  to  a  certain  seaport  was  to  be  decided  upon 
by  a  consultation  between  the  Chinese  Government  and 
the  banks.  The  term  of  the  loans  was  to  be  forty  years ; 
the  loans  to  be  secured  by  ' '  all  the  property  and  revenue 
of  the  four  railways  concerned  at  present  and  in  the 
future. ' '  Twenty  million  yen  was  to  be  at  once  advanced 
to  the  Chinese  Government,  the  interest  on  this  advance 
being  eight  per  cent. 

Kirin-Hueining  Railway  Loan  Agreement.  On  June  18, 
1918,  China  entered  into  a  loan  agreement  ^'  with  certain 
of  the  Government  controlled  banks  of  Japan,^*  and 
therefore,  to  all  intents  and  purposes,  with  the  Japanese 
Government,  according  to  which  the  banks  were  imme- 
diately to  advance  ten  million  dollars  to  the  Chinese 
Government  for  the  construction  of  a  railway  from  Kirin 

"  The  Industrial  Bank  of  Japan,  the  Bank  of  Choaen,  and  the  Bank  of 
Taiwan. 

"  The  text  of  this  agreement  was  not  made  public  by  the  Japanese 
Government  until  April  13,  1919.  For  translation,  see  MacMurray,  Xo. 
1918/15. 

"  MacMurray,  No.  1918/9. 

**  See  note  51  above. 


THE  JAPANESE  IN  MANCHUEIA  363 

to  Hueining,  that  is,  miming  through  the  Chientao  region, 
north  of  Korea,  and  crossing  the  Tumen  River  into  that 
country  and  traversing  a  fertile  district  with  abundant 
iron  and  other  mineral  resources.  The  loan  was  to  bear 
seven  and  a  half  per  cent,  annual  interest,  and  to  run  for 
forty  years.  The  banks,  in  order  to  make  this  loan,  were 
authorized  to  issue  bonds  secured  by  the  Chinese  Govern- 
ment which  were  to  bear  five  per  cent,  interest.  The 
money  thus  advanced  was  made  immediately  available 
to  the  Chinese  Government  and  without  restriction  as 
to  its  expenditure,  and  in  fact  was  used  by  that  Govern- 
ment for  current  expenses  and  not  for  the  purposes  for 
which  it  was  ostensibly  borrowed. 

In  addition  to  being  an  obligation  upon  the  part  of  the 
Chinese  Government,  the  advance  was  to  be  secured  by 
the  properties  of  the  proposed  railway — when  built.  In 
general,  the  other  features  of  the  loan  were  to  be  those 
of  the  Tientsin-Pukow  Eailway  Loan  Agreement  of  1908. 
It  was,  however,  provided  that  the  actual  amount  of 
funds  to  be  received  by  the  Chinese  Government  out  of 
the  loan  issue  should  be  more  profitable  to  it  than  what 
had  been  stipulated  in  the  Ssupingkai-Chengchiatun  Rail- 
way loan  agreement. 

Gold  Mining  and  Forestry  Loan.  On  August  2,  1918, 
was  signed  an  agreement  ^^  between  the  Government  of 
China  and  a  syndicate  of  Japanese  financial  interests, 
providing  for  a  loan  of  30,000,000  yen  in  Japanese  gold, 
for  the  ostensible  purpose  of  establishing  a  fund  for  the 
development  of  gold  mining  and  forestry  in  the  two  Man- 
churian  provinces  of  Heilungkiang  and  Kirin.  As  security 

"MacMurray,  No.  1918/11. 


364      FOREIGN"  RIGHTS  AND  INTERESTS  IN  CHINA 

for  the  loan  were  pledged  the  gold  mines  and  national 
forests  in  the  two  provinces  and  the  Chinese  Govern- 
ment's revenue  from  these  mines  and  forests.  It  was 
further  provided  that  should  the  Chinese  Government, 
within  the  period  of  the  operation  of  the  loan  agreement 
(ten  years)  desire  to  make  a  loan  from  others  in  respect 
to  mines,  national  forests  or  their  revenues,  or  to  dispose 
of  them,  the  Japanese  financial  interests  should  first  be 
consulted. 

South  Manchuria  Railway  Company.  In  order  to  esti- 
mate the  extent  and  character  of  the  political  and 
economic  influence  exerted  by  Japan  in  Manchuria  it  is 
necessary  to  consider  the  manner  in  which  she  has  unified 
her  interests  and  their  management  under  a  governmental 
instrumentality,  the  South  Manchuria  Eailway  Company. 

In  no  other  country  in  the  world,  not  even  in  Germany 
before  the  war,  are  large  commercial  interests  so  closely 
taken  under  governmental  control  and  aided  by  subsidies 
from  the  public  treasury  and  granted  other  preferential 
rights,  as  is  the  case  in  Japan.  And  especially  is  this 
true  of  the  railway  and  other  interests,  nominally  private 
in  character,  which  the  Japanese  have  obtained  in  China, 
for  here  the  political  and  economic  interests  of  Japan  are 
so  closely  united  as  to  be  treated  as  inseparable. 

For  the  exploitation  in  South  Manchuria  of  the  rights 
which  she  obtained  from  Russia,  Japan  at  once  estab- 
lished a  joint-stock  corporation  in  which  the  Government 
was  to  own  an  amount  of  stock  sufficient  to  enable  it  at 
all  times  to  control  its  operations.  That  this  company 
should  be  given  this  task  had  been  provided  for  in  the 
secret  protocols  annexed  to  the  Komura  treaty  of  Decem- 
ber 22, 1905,  between  China  and  Japan. 


THE  JAPANESE  IN  MANCHURIA  365 

The  sanction  for  the  organization  of  the  company  was 
given  by  a  Japanese  imperial  ordinance  of  June  7, 1906.^^ 
This  ordinance  provided  that  the  Government  should 
cause  the  organization  of  the  company,  the  shares  of 
which  were  to  be  registered  and  to  be  owned  only  by  the 
Japanese  and  Chinese  Governments  or  by  subjects  of 
Japan  or  China.  In  fact  the  Japanese  Government  now 
owns  four-jfifths  of  the  paid  up  stock  of  the  company. 
The  head  office  was  to  be  at  Tokyo,  and  the  Japanese 
Government,  subject  to  imperial  sanction,  was  to  appoint 
the  president  and  vice-president.  The  Government  was 
also  to  appoint  directors  from  among  the  shareholders, 
and  supervisors  who  were  to  supervise  the  business  of 
the  company  and  to  have  the  right  at  any  time  to  examine 
the  books  and  accounts  of  the  company.  Also  the  Govern- 
ment was  to  have  the  right  to  issue  such  orders  as  might 
be  deemed  necessary  ' '  to  superintend  the  business  of  the 
company, ' '  and  to  cancel  orders  of  officers  of  the  company 
and  to  dismiss  them  from  office.  In  short,  the  Japanese 
Government  was  to  lack  no  power  to  exercise  such  con- 
trol and  direction  as  it  might  desire  over  the  operation  of 
the  railways  and  mines  in  Manchuria  which,  it  was  pro- 
vided, should  be  handed  over  to  the  company. 

By  a  Government  order  of  August  1, 1906,  the  company 
was  authorized  to  operate  the  following  railways : 

Dairen-Changchun, 

Nankuanling-Port  Arthur, 

Tafangshen-Liushutun, 

Tashichiao-Yingkow, 

Yentai-Yentai  Coal  Mine  Railway, 

"The  text  of  this  ordinance  is  given  in  MacMurray,  note  to  No.  1905/18. 


366      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Sukiatun-Fushun, 
Mukden- Antunghien. 

**  For  the  convenience  and  profit  of  the  railways'*  the 
company  was  also  authorized  to  engage  in  the  following 
accessory  lines  of  business :  mining,  especially  the  opera- 
tion of  the  coal  mines  at  Fushun  and  Yentai ;  water  trans- 
portation; electrical  enterprises;  sale  on  commission  of 
the  principal  goods  conveyed  by  the  railways ;  warehous- 
ing; business  relating  to  the  land  and  buildings  on  the 
land  attached  to  the  railways. 

Within  the  areas  of  lands  used  for  the  railways  or  the 
accessory  lines  of  business,  the  company  was  also  ordered 
to  make  necessary  arrangements  for  engineering  works, 
education,  sanitation,  etc.;  and  to  defray  the  expenses 
thus  entailed,  the  company  was  authorized,  subject  to  the 
permission  of  the  government,  to  "  collect  fees  of  those 
who  live  within  the  area  of  lands  used  for  the  railways 
and  the  accessory  lines  of  business,  or  make  any  other 
assessments  for  necessary  repairs." 

The  total  amount  of  the  company's  capital  stock  was 
fixed  at  200,000,000  yen,  of  which  100,000,000  yen  were 
to  be  furnished  by  the  Imperial  Japanese  Government — 
this  amount,  however,  not  to  be  paid  in  cash,  but  to  be 
represented  by  the  railways  and  mines  and  lands  turned 
over  to  the  company.  If,  during  a  period  of  fifteen  years 
the  shareholders,  other  than  the  governments  of  China 
and  Japan,  should  receive  a  dividend  of  less  than  six 
per  cent,  per  annum  upon  the  amounts  paid  by  them  for 
their  stock,  the  Japanese  Government  was  to  make  good 
the  deficiency  up  to  the  six  per  cent.;  and  if,  for  any 
reason,  the  dividend  should  not  exceed  six  per  cent.,  no 


THE  JAPANESE  IN  MANCHURIA  367 

dividends  should  be  paid  on  the  shares  owned  by  the 
Japanese  Government. 

The  Japanese  Government  was  also  to  guarantee  the 
payment  of  interest  on  the  debentures  which  the  company 
might  issue  for  the  reconstruction  of  the  railways  or  for 
the  operation  of  the  accessory  business,  and,  if  necessary, 
the  government  was  to  guarantee  the  repayment  of  the 
principal  as  well.  The  plans  of  the  company's  business, 
the  estimates  of  the  costs  of  operation,  the  budgets  of 
income  and  expenditures,  and  the  rates  of  dividends  to 
be  paid  were  all  to  be  submitted  to  the  Japanese  Govern- 
ment for  approval,  and  at  all  times,  when  demanded,  the 
railways  and  other  properties  of  the  company  were  to  be 
placed  at  the  service  of  the  Government. 

The  foregoing  requirements  were  embodied  in  the 
Articles  of  Incorporation  of  the  company,  which  were 
issued  on  November  13,  1906;  and  on  April  1,  1907,  the 
railways  were  formally  transferred  to  the  company. 

Fushun  and  Yentai  Coal  Mines.  The  chief  coal  mines 
owned  and  operated  by  the  company  are  the  Fushun  and 
Yentai  mines.  These,  as  described  in  the  Japan  Year 
Booh  for  1918  are  as  follows : 

The  Fushun  Colliery  is  situated  about  twenty-two  miles  east  o£ 
Mukden,  as  the  crow  flies,  runs  for  about  twelve  miles  parallel  to 
the  river  Hun,  and  contains  deposits  of  eighty  to  one  hundred  and 
seventy-five  feet  in  thickness,  an  average  of  about  one  hundred  and 
thirty  feet.  The  storage  is  estimated  conservatively  at  eight  hun- 
dred million  tons.  At  present  five  pits  are  in  full  operation,  with 
the  total  output  of  six  thousand  tons  a  day,  of  which  the  two  pits, 
Togo  and  Oyama,  both  being  sunk  in  1910,  each  yields  two  thou- 
sand tons  a  day.  The  quality,  too,  is  excellent,  being  of  strong 
ralorie  power  and  containing  very  little  sulphur. 


368      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  Yentai  Coal  Fields  exist  north-east  of  Liaoyang  and  can  be 
reached  in  an  hour  by  rail  from  the  Yentai  station.  The  seams 
number  sixteen,  of  which  four  are  workable,  i,  e.,  first  seam  of  five 
feet,  and  second  of  four  to  six  feet,  third  of  three  to  eight  feet,  and 
fourth  of  five  feet.  The  coal  is  soft  and  pulverizable  and  emits  but 
little  smoke.  The  daily  output  according  to  the  report  at  the  end 
of  March,  1915,  reached  two  hundred  and  sixty  tons.^^ 

The  total  of  land  belonging  to  the  company,  according 
to  the  Japan  Year  Book,  is  62,351,825  tsuho — a  tsuho  or 
hu  being  a  little  less  than  four  square  yards. 

Other  Activities  of  the  South  Manchuria  Railway.     To 

the  foregoing  activities  of  the  South  Manchuria  Eailway 
Company  may  be  added  the  maintenance  of  a  regular  line 
of  steamers  between  Dairen  and  Shanghai,  via  Tsingtao, 
and  a  fleet  of  vessels  engaged  in  the  South  China  coast- 
wise trade. 

In  the  Japan  Year  Booh  for  1918  it  is  stated  (p.  719) 
that  the  company  was  maintaining  in  1916  in  the  railway 
zone  some  14  hospitals,  17  primary  schools,  10  Chinese 
(common)  schools,  28  business  schools,  9  girls'  practical 
schools,  one  medical  school  at  Mukden  and  a  technical 
school  and  a  teachers'  training  institute  at  Dairen. 
Besides  these  the  company  was  maintaining  a  polytech- 
nical  laboratory,  two  agricultural  experiment  stations 
and  farms,  and  15  water  supply  works. 

Authority  of  the  Government-General  of  Kwantung 
Over   the   Manchurian   Railways.     By  various  Imperial 

"  p.  179.  The  Penhsihu  coal  fields  in  Manchuria  are  not  operated  by  the 
South  Manchurian  Railway  Co.,  but  jointly  by  the  Chinese  Government 
and  the  Japanese  Okura  firm  of  Tokyo.  The  output  from  these  fields  is 
about  five  hundred  tons  a  day. 


THE  JAPANESE  IN  MANCHURIA  369 

Ordinances  issued  by  the  Japanese  Government ''^  the 
following  provisions  relating  to  the  status  of  the  South 
Manchuria  Railway  Company  were  put  into  force : 

The  Governor-General  of  Chosen  (Korea)  has  been 
authorized  to  entrust  to  the  company  the  construction, 
improvement,  preservation  and  operation  of  all  the  rail- 
ways and  the  undertakings  connected  therewith  under  his 
jurisdiction.  The  Manchurian  and  Korean  railways  are 
thus  united  into  one  system.  The  previously  existing 
Bureau  of  Railways  of  the  Chosen  Government  has  been 
abolished. 

By  Ordinance  No.  196,  effective  on  September  1,  1906, 
the  organization  of  the  Government-General  of  Kwan- 
tung  was  effected.  This  ordinance  provided  that  the 
Governor-General  of  the  leased  territory  should  "  take 
charge  of  the  protection  and  supervision  of  the  railway 
lines  in  South  Manchuria,'*  and  supervise  the  affairs  of 
the  railway  company.  He  was  further  authorized,  when 
he  should  deem  it  necessary,  to  employ  military  force 
**  for  the  protection  or  supervision  of  the  railway  lines." 
In  this  same  ordinance  it  was  provided  that  Japanese 
consular  officials  stationed  in  South  Manchuria  might,  in 
addition  to  their  regular  position,  be  appointed  as  secre- 
taries of  the  Government-General.  And,  in  this  connec- 
tion, it  may  also  be  noted  that  the  designation  of  persons 
to  be  appointed  Japanese  consuls  in  Manchuria  has  been 
vested  in  the  South  Manchuria  Railway  Company.  This 
creates  the  rather  remarkable  situation,  not  to  speak  of 
other  results,  that  if  one  has  a  claim  or  grievance  against 
the  company  he  is  obliged,  under  extraterritorial  princi- 

•*  For   translations   of   such    ordinances    see   notes   to   MacMurray,   No. 
1905/18. 

24 


370      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

pies,  to  take  the  case  for  hearing  before  a  judge  who  is 
practically  an  official  of  that  company.  Ordinance  196 
further  provided  that  consuls  appointed  also  as  secre- 
taries of  the  Government-General  of  Kwantung  should 
*'  take  charge  of  police  affairs  along  the  railway  lines 
under  the  instructions  of  their  superiors. ' ' 

The  control  of  the  Governor-General  of  Kwantung 
over  the  Manchurian  railways  was  made  still  more 
explicit  by  an  ordinance  of  July  31, 1917,  which  provided 
that  he  should  have  ' '  control  of  the  protection  and  super- 
vision of  the  railway  lines  in  South  Manchuria,  and  have 
charge  of  the  operation  of  the  South  Manchuria  Railway 
Company. 


CHAPTER  XII 

FoBMER  German  Rights  and  Interests  in  Shantung 


Germany  no  longer  has  a  Sphere  of  Interest  in  China, 
but  it  will  none  the  less  be  important  to  consider  what 
rights  she  possessed  before  the  war,  because  these  rights 
have  now,  by  the  Treaty  of  Versailles,  been  transferred 
to  Japan. 

The  German  sphere  was  practically  confined  to  the 
Province  of  Shantung  and  dated  from  the  time  of  the 
lease  by  her  in  1898  of  the  Kiaochow  area.  In  addition  to 
providing  for  this  lease,  the  Convention  of  1898  ^  granted 
to  Germany  important  railway,  mining  and  general  com- 
mercial and  industrial  preferential  rights.  These  three 
classes  of  rights  we  shaU  consider. 

Railway  Rights.  Concessions  were  granted  by  the 
Chinese  Government  for  two  railways:  one  to  run  from 
Kiaochow  and  Tsinanfu  to  the  boundary  of  Shantung 
Province  via  Weihsien,  Tsinchow,  Poshan,  Tsechuan  and 
Sniping ;  and  the  other  to  connect  Kiaochow  with  Ichowf  u, 
whence  an  extension  might  be  built  to  Tsinan  through 
Laiwuhsien.  The  purpose  of  building  these  lines  was 
declared  to  be  *'  solely  the  development  of  commerce," 
and  that, '  *  in  constructing  this  railroad  there  is  no  inten- 
tion to  unlawfully  seize  any  land  in  the  Province  of 
Shantung. '  * 

'  For  translation  from  the  official  German  text  as  published  in  behalf 
of  the  Chinese  Government  by  the  Imperial  Maritime  Customs,  see  Mac- 
Murray,  No.  1898/4. 

371 


372      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  order  to  carry  out  the  construction  and  operation 
of  these  railroads,  the  Lease  Agreement  provided  that  a 
Sino-German  company  should  be  formed,  in  which  both 
German  and  Chinese  merchants  should  have  the  right  to 
invest  money  and  participate  in  the  appointment  of  direc- 
tors for  the  management  of  the  roads. 

In  accordance  with  this  understanding  the  Shantung 
Eisenbahn  Gesellschaft  was  chartered  on  June  1,  1899, 
by  the  German  Government,^  this  company  being  organ- 
ized by  the  Deutsch-Asiatische  Bank. 

The  capital  of  this  company  as  chartered  by  the  Ger- 
man Government  was  fixed  at  fifty-four  million  marks; 
the  shareholders  were  to  be  Germans  or  Chinese ;  profits 
in  excess  of  five  per  cent,  were  to  be  shared  with  the 
German  Colonial  Administration  of  Kiaochow;  and,  so 
far  as  possible,  German  material  was  to  be  used  in  equip- 
ment and  construction.  Under  this  charter  the  line  from 
Tsingtao  to  Tsinanfu,  a  distance  of  245  miles,  and  a 
branch  line  to  the  Poshan  coal  fields,  a  distance  of  36 
miles,  were  built  and  opened  to  traffic  in  1904. 

By  an  understanding  arrived  at  March  21,  1900,'  be- 
tween the  railway  company  and  the  Chinese  authorities, 
and  embodied  in  a  written  instrument  of  that  date,  it  was 
provided  that,  for  the  present,  the  railways  should  be 
under  exclusive  German  management,  but  that  Chinese 
officials  should  be  allowed  to  participate  therein  as  soon 
as  shares  of  the  company  to  the  amount  of  Taels  100,000 
had  been  purchased  by  Chinese;  and  also  that,  should 
branches  of  the  administration  of  the  company  be  estab- 
lished in  Shantung,  one  Chinese  official  should  be  dele- 

*  For  translation  of  the  charter,  see  MacMurray,  note  to  1900/3. 
'  MacMurray,  No.  1900/3. 


GERMAN  EIGHTS  IN  SHANTUNG  373 

gated  to  each  one  of  them.  It  was  further  declared  that 
the  company  should  not  be  allowed  to  purchase  more  land 
than  was  necessary  for  the  railway  enterprise  and  its 
future  extensions.  At  railway  stations  where  customs 
offices  might  be  established,  the  railway  officials  were  to 
give  their  aid  in  collecting  the  legal  dues.  In  accordance 
with  the  general  obligations  and  rights  of  foreigners  in 
China,  foreigners  travelling  or  doing  business  in  the  inte- 
rior of  the  Province  of  Shantung  were  to  obtain  pass- 
ports duly  sealed  by  the  proper  Chinese  and  German 
authorities.  Chinese  subjects  employed  outside  the  leased 
territory  by  the  railway  company,  in  case  of  violation  of 
Chinese  law,  were  to  be  subject  to  the  jurisdiction  of  the 
Chinese  district  magistrate.  The  following  articles  of 
this  agreement  with  reference  to  the  use  of  foreign  or 
Chinese  troops  deserve  quotation: 

Article  16.  Troops  eventually  necessary  for  the  protection  of 
the  railway  will  be  stationed  by  the  Governor  of  the  Province  of 
Shantung.  Therefore  outside  the  100  li  zone  no  foreign  troops 
shall  be  employed  for  this  purpose.  The  Governor  of  the  Province 
of  Shantung  binds  himself  to  take  effective  measures  during  the 
period  of  surveying  as  well  as  when  the  railway  is  under  construc- 
tion or  opened  for  traffic  to  prevent  any  damage  being  done  to  it 
by  the  mob  or  by  rebels. 

Article  17.  Development  of  trade  and  communications  being 
the  only  purpose  of  the  railway,  no  transport  of  foreign  troops  and 
their  war  materials  shall  be  allowed  on  it.  The  Railway  Adminis- 
tration however  is  not  to  be  held  responsible  for  such  transport 
when  brought  into  a  position  of  constraint  by  war  or  similar  cir- 
cumstances. On  the  other  hand  the  Governor  of  the  Province  of 
Shantung  will  not  be  responsible  for  the  protection  of  sections  of 
the  railway  being  in  the  hands  of  the  enemy.  The  conditions  of 
this  Article  are  not  to  be  applied  to  the  section  of  the  railway 
within  the  100  li  zone. 


374      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Article  27.  In  the  German  leased  territory  the  rights  of  sov- 
ereignty are  safeguarded  by  the  Governor  of  Tsingtao.  In  the 
districts  of  the  remaining  part  of  the  Province  of  Shantung  through 
which  the  railway  is  running,  the  rights  of  sovereignty  are  safe- 
guarded by  the  Governor  of  the  Province  of  Shantung. 

With  regard  to  the  railway  from  Tsingtao  to  Tsinan 
this  important  fact  is  to  be  noticed,  which  Overlach  calls 
attention  to,*  that  it  is  the  only  road  in  China  over  which 
China  has  not  definitely  reserved  the  right,  at  some  fu- 
ture time,  to  assume  sole  control.  However,  by  Article 
XXVIII  of  the  agreement  of  March  21,  1900,  between 
Germany  and  China,  providing  regulations  for  the  Kiao- 
chow-Tsinan  Railway,  it  was  declared  that  the  Chinese 
Government  should  have  the  right  to  buy  back  the  line, 
but  that  this  matter  should  be  later  separately  consid- 
ered,— which  it  never  was. 

In  1913  Germany,  by  an  agreement  of  December  31,^ 
obtained  from  the  Chinese  Government  two  additional 
railway  concessions:  one  for  a  road  from  Koami  to 
Ichowfu  and  thence  to  Hanchuang,  thus  joining  it  up 
with  the  Tientsin-Pukow  line;  and  the  other  from 
Tsinanfu  to  some  point  on  the  Peking-Hankow  Railway. 
These  roads,  it  was  determined  in  the  final  agreement, 
should  be  owned  by  the  Chinese  Government  but  be  built 
with  German  capital  and  materials  and  under  the  super- 
vision, during  construction,  of  a  German  Engineer-in- 
Chief.  As  regards  construction,  it  was  agreed  that  the 
German  Government  should  be  accorded  the  same  terms 
and  conditions  as  those  embodied  in  the  railway  loan 
agreement  with  the  Belgians  on  September  24,  1912.* 

*  Foreign  Financial  Control  in  China,  p.  145. 

.» MacMurray,  No.  1913/16.  *The  Lung-Tsing-U-Hai  Railway. 


GERMAN  RIGHTS  IN  SHANTUNG  375 

This  meant  that  a  German  Traffic  Manager,  a  German 
Engineer-in-Chief,  and  a  German  Chief  Accountant 
should  be  employed,  and,  after  the  construction  was  com- 
pleted, to  remain  in  service  as  long  as  the  loan  agreement 
continued  in  force.  It  was  also  provided  that  if,  there- 
after, the  Chinese  Government  should  make  railway  loan 
agreements  with  any  other  countries,  the  terms  of  which 
concerning  construction  and  traffic  management  might  be 
more  favorable  than  those  in  the  present  agreement,  the 
same  privileges  should  be  accorded  to  the  two  railways 
concerned^ 

In  return  for  these  two  additional  railway  concessions 
Germany  declared  that  it  surrendered  all  other  rights  of 
railway  construction  granted  in  the  original  convention 
of  1898,  as  well  as  certain  other  railway  construction 
options  which  it  had  in  other  parts  of  China. 

It  has  been  rumored,  but  not  yet  (1920)  officially 
admitted,  that  in  June,  1914,  Germany  also  obtained  from 
the  Chinese  Government  an  option  with  regard  to  the 
building  westward  of  the  Tsinanfu-Shuntehfu  line,  the 
Chef  oo-Weihsien  line,  and  the  westward  extension  of  the 
Tsining-Kaifengfu  line. 

In  further  definition  of  Germany's  railway  interests  in 
Shantung  may  be  mentioned  the  agreement  between  the 
German  and  British  bankers  of  September  2,  1898,  else- 
where referred  to ;  ®  and  the  agreement  of  May  18,  1899, 
between  China,  on  the  one  side,  and  German  and  British 
banking  interests,  on  the  other  side,  according  to  which 
the  Shantung  section  of  the  Tientsin-Pukow  (Chinkiang) 

'  The  transference  to  Japan  of  these  railway  rights  is  covered  by  the 
Sino-Japanese  Agreement  of  September  28,  1918. 
"See  p.  284. 


376      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

railway  was  to  be  built  by  the  Grermans,  and  the  southern 
section  by  the  British,  with  the  proviso,  however,  that, 
after  construction,  the  two  sections  should  be  operated 
jointly.^ 

German  Mining  Rights  in  Shantung.  Article  IV,  Sec- 
tion II,  of  the  Lease  Agreement  of  1898  provided : 

The  Chinese  Government  will  allow  German  subjects  to  hold  and 
develop  mining  property  for  a  distance  of  thirty  li  from  each  side 
of  those  railways  [Tsingtao-Tsinan  and  Tsingtao-Chinchow  with 
extension  to  Tsinan]  and  along  the  whole  extent  of  those  lines. 
The  following  places  where  mining  operations  may  be  carried  on 
are  particularly  specified,  Weihsien  and  Poshan  along  the  hue  of 
the  northern  railway  from  Kiaochow  to  Tsinan,  and  Ichow,  Lai- 
wuhsien,  etc.,  along  the  southern  or  Kiaochow-Ichow-Tsinan  line. 
Both  German  and  Chinese  capital  may  be  invested  in  these  mining 
and  other  operations,  but  as  to  the  rules  and  regulations  relating 
thereto,  this  shall  be  left  for  future  consideration.  The  Chinese 
Government  shall  afford  every  facility  and  protection  to  German 
subjects  engaged  in  these  works,  just  as  provided  for  above  in  the 
article  relating  to  railway  construction,  and  all  the  advantages  and 
benefits  shall  be  extended  to  them  that  are  enjoyed  by  the  members 
of  other  Chinese-foreign  companies.  The  object  in  this  case  is  also 
the  development  of  commerce  solely. 

By  an  Imperial  German  decree  of  March  13,  1913,  the 
Shantung  Eailway  Company  was  given  charge  of  the 
exploitation  of  the  German  mining  rights  in  Shantung, 
and  authorized  to  increase  its  capital  to  sixty  million 
marks.  Previously  to  this,  these  mining  rights  had  been 
vested  in  a  German  company — the  Schantung  Bergbau 
Gesellschaft — which  had  been  chartered  June  1,  1899.^® 
By  its  charter  this  company  was  obliged  to  furnish  coal 

» Rockhill,  I,  p.  355.     MacMurray,  No.  1908/1,  note. 
*•  For  charter,  see  MacMurray,  note  to  No.  1900/4. 


GERMAN  RIGHTS  IN  SHANTUNG  377 

to  the  German  navy  at  a  price  five  per  cent,  below  the 
market  price  at  Tsingtao,  and  to  turn  over  five  per  cent, 
of  its  profits  as  a  contribution  for  the  harbor  and  other 
administrative  expenses  of  the  leased  territory. 

Before  its  liquidation  and  surrender  of  its  rights  to 
the  Eailway  Company,  the  Mining  Company  had  entered 
into  an  agreement  with  the  Chinese  Government,  dated 
July  24, 1911,^^  under  which  the  company  surrendered  all 
its  general  mining  privileges,  that  is,  along  the  entire 
length  of  the  German  railways  in  Shantung,  and,  in 
exchange,  had  obtained  specific  mining  rights  in  Fangtzu, 
Tzuchuan,  Chinlingchen,  and  Changtien.  As  regards  the 
zones  within  which  the  mining  rights  were  surrendered, 
it  was  provided  that  the  existing  Chinese  mines  should 
be  closed,  and  that  no  mines  should  be  opened  upon  a 
large  scale  before  1920,  after  which  time, ' '  if  the  Chinese 
Government  or  Chinese  merchants  wish  to  carry  on  min- 
ing operations  in  the  areas  relinquished  by  the  company 
according  to  this  agreement,  whenever  capital  is  insuffi- 
cient they  must  borrow  German  capital.  If  they  require 
supplies  of  machinery  they  must  purchase  German  mate- 
rials, and  if  they  wish  to  engage  foreign  experts  they 
must  engage  Germans." 

German  Commercial  and  Industrial  Preferential  Rights 
in  Shantung.  As  to  these  the  Convention  of  1898  provided 
as  follows : 

'*  The  Chinese  Government  binds  itself  in  all  cases 
where  foreign  assistance,  in  persons,  capital  or  material, 
may  be  needed  for  any  purpose  whatever  within  the 
Province  of  Shantung,  to  offer  the  said  work  or  supply- 

"  For  translation  see  MacMurray,  note  to  No.  1900/4. 


378      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ing  of  materials,  in  first  instance  to  German  manufac- 
turers and  merchants  engaged  in  undertakings  of  the 
kind  in  question.  In  case  German  manufacturers  or  mer- 
chants are  not  inclined  to  undertake  the  performance  of 
such  works  or  the  furnishing  of  materials,  China  shall 
then  be  at  liberty  to  act  as  she  pleases." 

As  has  been  earlier  mentioned.  Great  Britain,  at  the 
time  of  the  leasing  by  her  of  Weihaiwei,  took  pains  to 
notify  the  German  authorities  that  the  lease  was  not  to 
be  taken  as  evidencing  an  intention  of  injuring  or  con- 
testing the  rights  and  interests  of  Germany  in  the  prov- 
ince or  of  creating  difficulties  for  her  in  the  province,  and 
that  she.  Great  Britain,  had  no  intention  of  building  a 
railway  from  her  leased  area  into  the  interior.  This 
attitude  of  Great  Britain  is,  however,  to  be  interpreted 
in  light  of  the  fact  that  she  did  not  know,  at  that  time, 
that  Germany,  by  the  lease  agreement  of  1898  with  China, 
had  obtained  special  commercial  rights  in  the  province. 
The  text  of  the  portions  of  the  Kiaochow  Treaty  relating 
to  these  industrial  and  economic  preferences  was  not 
made  public  until  1908.  And  it  cannot  be  doubted  that 
this  ignorance  upon  the  part  of  Great  Britain,  in  part  at 
least,  explained  her  willingness,  in  September,  1898,  to 
support  her  bankers,  in  the  agreement  between  them  and 
the  German  syndicate  interested  in  the  building  of  rail- 
ways in  China,  that  the  German  Sphere  of  Interest  in 
respect  to  railway  construction  should  include  the  Prov- 
ince of  Shantung.^2 

On  October  16,  1900,  that  is,  during  the  Boxer  out- 
break. Great  Britain  signed  an  agreement  with  Germany 
in  which  she  declared  it  to  be  "  a  matter  of  joint  and 

"MacMurray,  note  to  No.  1900/5. 


GERMAN  RIGHTS  IN  SHANTUNG  379 

international  interest  that  the  ports  on  the  rivers  and 
littoral  of  China  should  remain  free  and  open  to  trade 
and  to  every  other  legitimate  form  of  economic  activity 
for  the  nationals  of  all  countries  without  distinction," 
and  that  the  two  countries  would  exercise  their  influence 
to  sustain  this  principle  for  all  Chinese  territory.^*  This 
agreement  is  more  specifically  considered  in  the  chapter 
dealing  with  the  '*  Open  Door." 

The  assurances  given  by  the  German  Government  of  its 
intention  within  its  sphere  and  leased  area  to  respect  the 
*  *  open  door  policy  ' '  have  been  earlier  referred  to. 

In  1902  (April  19),  in  a  memorandum  to  the  United 
States  Government,  the  German  Government  disavowed 
a  claim  of  exclusive  commercial  and  industrial  rights  in 
Shantung.  The  provisions  of  the  Convention  of  1898,  it 
was  declared  ' '  merely  bind  China  to  offer  the  works  and 
schemes  concerned  to  Germans,  but  leave  to  persons  of 
other  nationalities  absolute  freedom  to  obtain  the  con- 
tracts or  the  furnishing  of  material  by  offering  more 
favorable  terms."  ^* 

Upon  terms  which  have  not  yet  been  made  public,  the 
Germans  obtained  from  China  the  right  to  lay  submarine 
cables  from  Tsingtao,  and  at  the  present  time  there  are 
such  cables  to  Chefoo  and  Shanghai.  By  special  pro- 
vision, in  the  Treaty  of  Versailles,  these  are  to  pass  to 
Japan. 


"MacMurray,  No.  1900/5. 
"MacMurray,  No.  1898/4. 


CHAPTER  XIII 
Japan's  Position  in  Shantung 


Japan's  claim  to  a  sphere  of  interest  in  Shantung  dates 
only  from  1914,  when  she  ousted  the  Germans  from  their 
leased  area  and  herself  took  possession  not  only  of  that 
area  but  of  the  other  German  rights  in  the  province. 
Because  of  the  very  serious  disputes  which  have  arisen 
with  regard  to  Japanese  rights  in  this  region,  it  will  be 
necessary  to  consider  with  some  degree  of  particularity 
the  circumstances  attending  the  establishment  of  Japan- 
ese interests  in  this  part  of  China. 

Whether  or  not  Japan  came  into  the  war  upon  the 
request  of  Great  Britain  will  not  be  certainly  known  until 
the  foreign  offices  of  those  countries  see  fit  to  make  public 
the  correspondence  of  the  time.  It  is,  indeed,  uncertain 
whether  or  not,  had  Japan  been  asked  to  do  so,  she  was 
obligated  to  that  action  by  the  Anglo-British  Treaty  of 
Alliance.  Japanese  public  men  have  very  generally  stated 
that  Japan's  entrance  was  dictated  by  her  sense  of  obliga- 
tion under  that  treaty,  but  Viscount  Ishii,  in  an  important 
public  speech  in  America,  assured  his  hearers  that  the 
Alliance  imposed  no  such  obligation.  Whatever  the  facts 
may  have  been  regarding  these  matters,  it  is  certain  that 
Japan  quickly  saw  that  it  would  be  to  her  own  interest 
to  destroy  German  influence  in  the  Far  East  and  to  lay 
the  basis  at  least  for  a  claim  for  herself  of  those  interests 
or  certain  of  them  at  the  end  of  the  war. 

On  August  15,  1914,  therefore,  Japan  presented  an 

380 


JAPAN'S  POSITION  IN  SHANTUNG  381 

ultimatum  ^  to  Germany  in  which  she  *  *  advised ' '  that 
country  to  withdraw  her  armed  vessels  from  Japanese 
and  Chinese  waters  or  to  disarm  those  which  could  not  be 
withdrawn,  and  * '  to  deliver  on  a  date  not  later  than 
September  15  to  the  Imperial  Japanese  authorities,  with- 
out condition  or  compensation,  the  entire  leased  territory 
of  Kiaochow  with  a  view  to  the  eventual  restoration  of 
the  same  to  China.'* 

On  the  same  day  Count  Okuma,  the  Premier  of  Japan, 
sent  to  the  East  and  West  News  Bureau  of  New  York  (a 
Japanese  publicity  office)  a  message  in  which  he  said: 
''Japan's  proximity  to  China  breeds  many  absurd 
rumors ;  but  I  declare  that  Japan  acts  with  a  clear  con- 
science, in  conformity  with  justice  and  in  perfect  accord 
with  her  ally.  Japan  has  no  territorial  ambition,  and 
hopes  to  stand  as  the  protector  of  peace  in  the  Orient. ' ' 

In  a  public  address  in  Tokyo,  three  days  later,  he 
declared:  **  Japan's  warlike  operations  will  not  extend 
beyond  the  limits  necessary  for  the  attainment  of  the 
object  of  the  defense  of  her  own  legitimate  interests.  The 
Imperial  Government  will  take  no  such  action  as  could 
give  to  a  third  party  any  cause  for  anxiety  or  uneasiness 
regarding  the  safety  of  their  territories  or  possessions." 

Count  Okuma's  Message  to  the  American  People.     In 

order  that  Americans  especially  might  be  still  further 
assured  of  her  intentions.  Count  Okuma,  on  August  24, 
cabled  to  the  New  York  Independent  the  following 
message : 

I  gladly  seize  the  opportunity  to  send,  through  the  medium  of 
The  Independent,  a  message  to  the  people  of  the  United  States, 
who  have  always  been  helpful  and  loyal  friends  of  Japan. 

*  MacMurray,  note  to  No.  1914/9. 


382      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

It  is  my  desire  to  convince  your  people  of  the  sincerity  of  my 
Government  and  of  my  people  in  all  their  utterances  and  assurances 
connected  with  the  present  regrettable  situation  in  Europe  and  the 
Far  East. 

Every  sense  of  loyalty  and  honor  obliges  Japan  to  co-operate  with 
Great  Britain  to  clear  from  these  waters  the  enemies  who  in  the 
past,  the  present  and  the  future  menace  her  interests,  her  trade, 
her  shipping  and  her  people's  lives. 

This  Far  Eastern  situation  is  not  of  our  seeking. 

It  was  ever  my  desire  to  maintain  peace  as  will  be  amply  proved ; 
as  President  of  the  Peace  Society  of  Japan  I  have  consistently  so 
endeavored. 

I  have  read  with  admiration  the  lofty  message  of  President 
Wilson  to  his  people  on  the  subject  of  neutrality. 

We,  of  Japan,  are  appreciative  of  the  spirit  and  motives  that 
prompted  the  head  of  your  great  nation  and  we  feel  confident  that 
his  message  will  meet  with  a  national  response. 

As  Premier  of  Japan,  I  have  stated  and  I  now  again  state  to  the 
people  of  America  and  of  the  world  that  Japan  has  no  ulterior 
motive,  no  desire  to  secure  more  territory,  no  thought  of  depriving 
China  or  any  other  peoples  of  anything  which  they  now  possess. 

My  Government  and  my  people  have  given  their  word  and  their 
pledge,  which  will  be  as  honorably  kept  as  Japan  always  keeps 
promises. 

Japan's  Actions  in  Shantung.  The  purposes  of  this 
volume  do  not  make  it  necessary  to  describe  the  military 
operations  leading  to  the  fall  of  Tsingtau  and  to  the  occu- 
pation by  the  Japanese  of  the  entire  leased  territory  of 
Kiaochow.  It  is,  however,  pertinent  to  observe  that  the 
Japanese  troops  were  landed  at  Lungkow  on  the  northern 
coast  of  Shantung,  far  from  Tsingtau,  and  in  disregard 
of  the  protests  of  neutral  China.  Following  the  precedent 
of  the  Eusso- Japanese  War  China  had  declared  a  "  war 
zone  "  within  which  she  gave  her  voluntary  consent  to 
have  military  operations  conducted.    No  attention,  how- 


JAPAN'S  POSITION  IN  SHANTUNG  383 

ever,  was  paid  by  the  Japanese  to  the  limits  thus  set; 
and,  in  fact,  Japanese  troops  were  sent  not  only  against 
Tsingtau  but  westward  along  the  Tsingtau-Tsinanfu 
Eailway  until  Tsinanfu,  the  capital  of  the  province  and 
more  than  two  hundred  and  fifty  miles  from  Tsingtau, 
was  occupied.^ 

These  actions  were  disconcerting  to  the  Chinese  and 
disquieting  as  well  to  the  other  Powers.  This  feeling  was 
soon  increased  by  a  number  of  other  incidents. 

It  will  be  remembered  that  when  Tsingtau  had  been 
taken  possession  of  by  the  Germans  an  understanding 
was  arrived  at  with  the  Chinese  Maritime  Customs 
according  to  which  the  chief  of  the  customs  office  at 
Tsingtau  was  to  be  of  German  nationality.  Germany 
having  been  ousted  from  that  city,  and  its  restoration  to 
China  having  been  promised  by  the  Japanese,  that  is,  the 
Japanese  being  supposed  to  be  only  in  temporary  mili- 
tary— not  civil — occupation,  the  Chinese  Government 
suggested  an  Englishman  as  Customs  Commissioner  at 
Tsingtau.  To  this  Japan  objected.  China  then  proposed 
a  Japanese  as  Commissioner  with  an  Englishman  as 
Deputy  Commissioner.  This  also  was  objected  to  by 
Japan.  Other  suggestions  were  made  by  China,  all  of 
which  were  unacceptable  to  the  Japanese  Government, 
which  finally  made  it  plain  that  it  would  not  be  satisfied 
unless  it  was  given  the  right  to  appoint  the  Commissioner 
and  his  staff  who  should  be  Japanese.  This  was  un- 
fair to  the  other  members  of  the  Maritime  Customs 
service  as  regarded  their  rights  of  promotion  on  the 

*A  small  contingent  of  British  troops  participated  in  the  expedition 
against  Tsingtau,  which,  however,  landed  within  the  leased  area,  and  con- 
fined their  objectives  to  the  capture  of  that  territory. 


384      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

frrounds  of  seniority  of  service,  and  also  highly  objec- 
tionable to  China,  and,  it  may  be  observed,  to  the  other 
Powers,  since  confidence  was  not  felt  that  the  customs 
regulations  would  be  rigorously  and  impartially  applied 
to  Japanese  merchants.  China  then  finally  suggested  that 
a  Japanese  be  appointed  as  Commissioner  of  Customs  at 
Tsingtau,  and  that  eight  members  of  the  Japanese  Cus- 
toms Department  be  appointed  in  the  Chinese  customs 
in  the  lowest  grade,  but  even  this  offer  was  refused,  and 
Japanese  officials  continued  to  administer  the  customs 
of  Kiaochow  until  the  agreement  of  August  6,  1915,'  by 
which  the  Japanese  were  substituted  for  the  Germans 
in  the  rights  under  the  old  Tsingtau  customs  agreement.* 
One  result  has  been  the  smuggling  or  introduction  into 
China  from  Japan  in  the  form  of  military  supplies  or 
through  the  parcel  post  of  enormous  quantities  of  mor- 
phine in  violation  of  the  laws  of  China  and  of  interna- 
tional covenants  to  which  Japan  is  herself  a  party. 

Still  more  disconcerting  to  China  was  the  fact  that  the 
Japanese  continued  to  operate  the  Shantung  Railway 
from  Tsingtau,  and  that  they  erected  military  barracks 
at  various  points  along  the  line  and  retained  considerable 
numbers  of  troops  at  those  points.  This  railway,  it  is  to 
be  observed,  was  not  the  property  of  the  German  Govern- 
ment and  therefore  subject  to  confiscation  under  military 
law,  but  was  a  private  concern,  the  shares  of  which  were 
owned  by  German  and  Chinese  individuals.'' 

To  a  very  considerable  extent,  under  German  opera- 
tion, Chinese  had  been  employed  in  the  operation  of  the 

•MaoMurray,  No.  1915/12.  « MacMurray,  No.  1899/2. 

"  There  is  good  groiind  for  believing,  however,  that  the  Chinese  share- 
holders were  men  of  straw,  the  real  owners  being  private  German  citizens. 
(See  Far  Eastern  Review,  Nov.,  1914). 


JAPAN'S  POSITION  IN  SHANTUNG  385 

line.  After  seizure  by  the  Japanese  these  were,  in  prac- 
tically every  case,  replaced  by  nationals  of  Japan. 

The  Japanese  military  forces  assumed  also  the  admin- 
istration of  the  postal  and  telegraphic  services  within 
the  leased  area.  The  control  of  these  was  surrendered 
to  the  Chinese  by  an  agreement  of  March  26,  1917.® 

Finally,  and  most  openly  disregardful  of  the  sovereign 
rights  of  China,  was  the  institution  by  Japan  of  civil 
governments  at  various  points  in  Shantung.  This  civil 
administration  was  a  subordinate  branch  of  the  military 
administration,  that  is,  a  mode  of  exercising  military 
occupation,  and  was  defended  by  the  Japanese  as  such. 
This  defense,  however,  did  not  touch  the  essential  point 
that  the  Japanese,  without  the  consent  of  China  and 
against  her  protests,  were  exercising  police  powers  and 
the  rights  of  taxation  outside  of  the  leased  area. 

Japanese  Deny  Obligation  to  Return  Kiaochow  to  China. 

But  not  in  facts  alone  were  there  indications  that  Japan 
intended  a  more  than  temporary  military  occupation,  and 
was  prepared  to  exercise  a  jurisdiction  in  the  province 
which  the  Germans  themselves  had  never  claimed.''  There 
came  from  Japan  official  pronouncements  that  the  Japa- 
nese Grovernment  did  not  consider  itself  bound  by  any 
engagement  eventually  and  unconditionally  to  restore  the 
leased  area  to  China. 

On  December  9,  1914,  Baron  Kato,  the  Minister  of 
Foreign  Affairs,  was  interrogated  in  the  Japanese  Par- 
liament as  to  the  intentions  of  the  Government  with  ref  er- 


•MacMurray,  No.  1917/5. 

*  Japan  assumed  and  exercised  mining  rights  which  Germany,  sometime 
before  the  war  had  formally  surrendered  to  China. 

25 


386      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ence  to  the  restoration  to  China  of  Tsingtau,  and  in  reply 
said: 

Whether  the  Government  is  going  to  restore  Tsingtau  to  China 
or  not  ...  is  to  be  settled  in  the  future  and  I  am  not  in  a  position 
to  give  any  definite  reply  to  this  question.  When  further  pressed 
to  declare  whether  the  Japanese  Government  had  made  any  binding 
promises  in  the  matter,  he  replied :  "  I  assure  you  that  the  Govern- 
ment has  never  entered  into  any  such  contract  with  any  foreign 
countries  about  the  question  of  Tsingtau.  The  reason  for  which 
the  governm:ent  in  its  ultimatum  requested  Germany  to  restore  the 
leased  territory  to  China  is  just  similar  to  that  for  which  years 
ago  the  three  Powers  jointly  requested  Japan  to  restore  to  China 
the  Liaotung  Peninsula  which  Japan  had  occupied  during  the 
China-Japanese  War.  Mr.  Ogawa  said  that  if  Germany  accepted 
the  Japanese  ultimatum,  the  result  would  have  been  rather  difficult 
to  Japan,  because  there  is  a  special  contract  between  Germany  and 
China  as  to  the  restoration  of  Tsingtau  to  China.  But  as  you  may 
know  from  the  terms  of  the  government's  ultimatum  to  Germany 
our  intention  was  to  cause  Germany  to  restore  Tsingtau  to  China 
without  any  conditions  or  compensations  whatever. 

The  language  which  has  been  quoted  was  by  no  means 
free  from  ambiguities,  but  the  intimation  was  clearly 
given  that  inasmuch  as  Germany  had  not  made  the  sur- 
render in  obedience  to  Japan's  ultimatum,  and  a  military 
operation  on  the  part  of  Japan  had  been  necessary  before 
the  Germans  were  driven  out,  the  Japanese  Government 
held  itself  no  longer  bound  by  the  declarations  in  that 
ultimatum. 

Group  I  of  the  Twenty-One  Demands  of   1915.     Tho 

apprehensions  of  the  Chinese  as  well  as  of  the  other 
interested  Treaty  Powers  were  seen  to  be  fully  justified 
when,  early  in  1915  (January  18),  came  the  presentation 
to  China  by  Japan  of  the  Twenty-One  Demands.     The 


JAPAN'S  POSITION  IN  SHANTUNG  387 

first  group  of  these  demands  related  to  Shantung,  and 
was  as  follows : 

The  Governments  of  Japan  and  China  being  desirous  of  main- 
taining the  peace  of  Eastern  Asia  and  of  further  strengthening  the 
friendly  relations  existing  between  the  two  neighboring  nations, 
agree  to  the  following  articles : 

1.  The  Chinese  Government  agrees  that  when  the  Japanese  Gov- 
ernment hereafter  approaches  the  German  Government  for  the 
transfer  of  all  rights  and  privileges  of  whatsoever  nature  enjoyed 
by  Germany  in  the  Province  of  Shantung,  whether  secured  by 
treaty  or  in  any  other  manner,  China  shall  give  her  full  assent 
thereto. 

2.  The  Chinese  Government  agrees  that  within  the  Province  of 
Shantung  and  along  its  sea  border,  no  territory  or  island  or  land 
of  any  name  or  nature  shall  be  ceded  or  leased  to  any  third  Power. 

3.  The  Chinese  Government  consents  to  Japan  building  a  rail- 
way from  Chef 00  or  Lungkow  to  join  the  Kiaochow-Tsinanfu 
Eailway. 

4.  The  Chinese  Government  agrees  that  for  the  sake  of  trade 
and  for  the  residence  of  foreigners  certain  important  places  shall 
be  speedily  opened  in  the  Province  of  Shantung  as  treaty  ports, 
such  necessary  places  to  be  jointly  decided  upon  by  the  two  govern- 
ments by  separate  agreement. 

China's  Reply.  As  to  the  first  of  these  demands  the 
Chinese  Government  maintained  that  the  matter  was  one 
which  should  be  left  for  post  helium  settlement.  This 
being  rejected  by  the  Japanese  representatives,  the 
Chinese  asked  that  the  following  declaration  be  made : 

The  Japanese  Government  declares  that  when  the  Chinese  Gov- 
ernment give  their  assent  to  the  disposition  of  interests  above 
referred  to,  Japan  will  restore  the  Leased  Territory  of  Kiaochow. 
to  China,  and  further  recognizes  the  right  of  the  Chinese  Govern- 
ment to  participate  in  the  negotiations  referred  to  above  betweea 
Japan  and  Germany. 


388      FOREIGN  BIGHTS  AND  INTERESTS  IN  CHINA 

In  other  words,  it  was  asked  that  Japan  reaffirm  the 
declaration  made  by  her  in  her  ultimatum  of  August  15, 
1914,  to  Germany. 

The  Chinese  representation  also  asked  that,  until  the 
restoration  of  Kiaochow  to  China,  the  maritime  customs, 
telegraphs,  and  post  offices  should  continue  to  be  admin- 
istered as  before  the  war,  and  that  Japanese  troops  out- 
side of  the  leased  area  be  withdrawn.  All  of  these  pro- 
posals were  rejected  by  the  Japanese  representatives. 

To  the  second  demand  that  a  promise  be  given  by 
China  that  within  the  Province  of  Shantung  and  along 
its  sea  border  no  territory  or  island  or  land  of  any  name 
or  nature  should  be  ceded  or  leased  to  any  third  Power, 
China  gave  her  assent.® 

To  the  third  demand  China  expressed  her  willingness 
to  assent  provided  she  be  given  the  privilege  of  building 
the  railroad  from  Chef oo  to  Lungkow  to  connect  with  the 
Tsingtau-Tsinanfu  Railway,  in  which  case  Japan  was 
first  to  be  approached  for  the  necessary  capital.  This 
the  Japanese  agreed  to. 

To  the  fourth  demand  that  additional  ports  in  Shan- 
tung be  opened  to  international  trade,  China  assented, 
although,  as  she  observed,  "  this  was  a  demand  on  the 
part  of  Japan  for  privileges  additional  to  any  that 
hitherto  had  been  enjoyed  by  Germany  and  was  not  an 
outcome  of  the  hostilities  between  Japan  and  Germany, 

*  It  is  of  interest  to  note  that  when,  finally,  Japan  was  obliged  to  admit 
the  fact  which  at  first  she  had  denied,  that  she  was  making  a  series  of 
demands  upon  China,  the  statement  of  these  demands  which  she  supplied 
to  the  other  Treaty  Powers  as  regards  this  non-alienation  agreement,  was 
to  the  eflFect  that  no  cession  or  lease  would  be  made  to  any  foreign  Power, 
which,  of  course,  would  include  Japan.  The  demand  that  was  actually 
made  was  that  there  would  be  no  lease  or  cession  to  any  third  Power,  the 
way  thus  being  left  open  for  leases  or  cessions  to  Japan. 


JAPAN'S  POSITION  IN  SHANTUNG  389 

nor,  in  the  opinion  of  the  Chinese  Government,  was  its 
acceptance  essential  to  the  preservation  of  peace  in  the 
Far  East." « 

Revised  Demands.  In  the  revised  demands,  presented 
April  26,  Group  I  was  as  follows : 

The  Japanese  Government  and  the  Chinese  Government,  being 
.lesirous  of  maintaining  the  general  peace  in  Eastern  Asia  and 
further  strengthening  the  friendly  relations  and  good  neighborhood 
existing  between  the  two  nations,  agree  to  the  following  articles : 

Article  1,  The  Chinese  Government  engages  to  give  full  assent 
to  all  matters  upon  which  the  Japanese  Government  may  hereafter 
agree  with  the  German  Government,  relating  to  the  disposition  of 
all  rights,  interests  and  concessions,  which  Germany,  by  virtue  of 
treaties  or  otherwise,  possesses  in  relation  to  the  Province  of 
Shantung. 

Article  2.  (Changed  into  an  exchange  of  notes.)  The  Chinese 
Government  declares  that  within  the  Province  of  Shantung  and 
along  its  coast  no  territory  or  island  will  be  ceded  or  leased  to  any 
Power  under  any  pretext. 

Article  3.  The  Chinese  Government  consents  that  as  regards 
the  railway  to  be  built  by  China  herself  from  Chefoo  or  Lungkow 
to  connect  with  the  Kiaochow-Tsinanfu  railway,  if  Germany  is 
wilHng  to  abandon  the  privilege  of  financing  the  Chefoo-Weihsien 
line,  China  will  approach  Japanese  capitahsts  to  negotiate  for  a 
loan. 

Article  4.  The  Chinese  Government  engages,  in  the  interest  of 
trade  and  for  the  residence  of  foreigners,  to  open  by  China  herself 
as  soon  as  possible  certain  suitable  places  in  the  Province  of  Shan- 
tung as  Commercial  Ports. 

(Supplementary  Exchange  of  Notes.) 

The  Places  which  ought  to  be  opened  are  to  be  chosen,  and  the 
regulations  are  to  be  drafted,  by  the  Chinese  Government,  but  the 
Japanese  Minister  must  be  consulted  before  making  a  decision. 

•China's  official  History  of  the  Sino-Japaneae  Treaties. 


390      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Resulting  Treaty  and  Notes.  In  their  final  form,  as 
embodied  in  the  treaty  entered  into  as  the  result  of  the 
nltimatum  by  Japan  to  China,  the  provisions  relating  to 
Shantung  were  as  follows :  ^® 

Article  1.  The  Chinese  Government  agrees  to  give  full  assent 
to  all  matters  upon  which  the  Japanese  Government  may  hereafter 
agree  with  the  German  Government  relating  to  the  disposition  of 
all  rights,  interests  and  concessions  which  Germany,  by  virtue  of 
treaties  or  otherwise,  possesses  in  relation  to  the  Province  of 
Shantung, 

Article  2.  The  Chinese  Government  agrees  that  as  regards  the 
railway  to  be  built  by  China  herself  from  Chefoo  or  Lungkow  to 
connect  with  the  Kiaochow-Tsinanfu  railway,  if  Germany  abandons 
the  privilege  of  financing  the  Chefoo-Weihsien  line,  China  will 
approach  Japanese  capitalists  to  negotiate  for  a  loan. 

Article  3.  The  Chinese  Government  agrees  in  the  interest  of 
trade  and  for  the  residence  of  foreigners,  to  open  by  China  herself 
as  soon  as  possible  certain  suitable  places  in  the  Province  of  Shan- 
tung as  Commercial  Ports. 

Article  4.  The  present  treaty  shall  come  into  force  on  the  day 
of  its  signature. 

In  an  **  exchange  of  notes  "  of  even  date  with  the 
treaty,  China  promised  that  "  within  the  Province  of 
Shantung  or  along  its  coast  no  territory  or  island  will  be 
leased  or  ceded  to  any  foreign  Power  under  any  pretext.'* 

Also  that  the  places  in  Shantung  to  be  opened  as  com- 
mercial ports  ' '  will  be  selected  and  the  regulations 
therefor  will  be  drawn  up,  by  the  Chinese  Government 
itself,  a  decision  concerning  which  will  be  made  after 
consulting  with  the  Minister  of  Japan. ' ' 

'•  For  the  texts  of  this  Treaty  and  the  Notes  accompanying  it,  see  jMac- 
Murray,  No.  1915/8.  MacMurray  gives  also  the  terms  of  the  original 
Japanese  Demands  as  reported  by  the  Japanese  Government  as  well  as 
those  reported  by  the  Chinese  Foreign  Office. 


JAPAN'S  POSITION  IN  SHANTUNG  391 

As  regards  the  restoration  to  China  of  the  leased  area 
of  Kiaochow,  the  following  was  also  embodied  in  notes 
exchanged : 

When,  after  the  termination  of  the  present  war,  the  leased  terri- 
tory of  Kiaochow  Bay  is  completely  left  to  the  free  disposal  of 
Japan,  the  Japanese  Government  will  restore  the  said  leased  terri- 
tory to  China  under  the  following  conditions : — 

1.  The  whole  of  Kiaochow  Bay  to  be  opened  as  a  Commercial 
Port." 

2.  A  concession  under  the  exclusive  jurisdiction  of  Japan  to  be 
established  at  a  place  designated  by  the  Japanese  Government. 

3.  If  the  foreigQ  Powers  desire  it,  an  international  concession 
may  be  established. 

4.  As  regards  the  disposal  to  be  made  of  the  buildings  and 
properties  of  Germany  and  the  conditions  and  procedure  relating 
thereto,  the  Japanese  Government  and  the  Chinese  Government 
shall  arrange  the  matter  by  mutual  agreement  before  the  resto- 
ration. 

Effect  of  China's  Declaration  of  War  Against  Germany. 

On  March  14,  1917,  China  severed  diplomatic  relations 

with  Germany  and   on   August  14  of   the   same   year 

declared  war  against  Germany  and  Austria-Hungary,  at 

the  same  time  declaring  that  all  treaties,  conventions  and 

agreements  between  herself  and  those  countries  were 
abrogated.  ^2 

There  has  been  some  controversy  as  to  what  was  the 
effect  of  this  declaration  of  abrogation  as  determined  by 
general  principles  of  international  law  and  practice,  and, 

"  The  Lease  Agreement  of  1898  had  covered  only  the  waters  of  Kiao- 
chow Bay  up  to  the  high-water  mark,  and  two  points  at  the  mouth  of 
the  Bay. 

"For  the  terms  of  the  Chinese  Declaration  of  War,  see  MacMurray, 
No.  1917/7. 


392      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

consequently,  as  to  what  German  rights  in  China  were 
in  existence  at  the  end  of  the  war  to  which,  under  the 
terms  of  the  Sino-Japanese  agreements  of  1915,  Japan 
might  lay  claim.^^     As  will  later  appear,  the  Powers 

"Accepted  international  law  recognizes  that  a  declaration  of  war  ipso 
facto  abrogates  not  all  treaties  between  the  countries  concerned  but  only 
those  that  are  described  as  "  transitory," — transitory  as  in  the  sense  of 
passing  along  or  continuing  in  force  after,  as  well  as  before,  a  declaration 
of  war.  It  is  universally  agreed  that  when  a  piece  of  territory  has  been 
transferred  from  one  sovereignty  to  another  by  treaty,  that  cession  is  not 
annulled  if,  later,  war  is  declared  between  the  two  countries.  For  example, 
as  a  legal  proposition,  there  could  be  no  claim  that  the  outbreak  in  1914 
of  war  between  Grermany  and  France  operated,  ipso  facto,  to  annul  the 
provision  of  the  treaty  of  Frankfort  of  1871  which  provided  for  the  annex- 
ation by  Grermany  of  the  former  French  provinces  of  Alsace  and  Lorraine. 
The  matter  is  not  so  clear,  however,  with  reference  to  such  railway  and 
mining  rights  as  Germany  had  obtained  in  Shantung  by  treaty,  nor  even 
as  to  the  area  of  Kiaochow  which  was  not  ceded  outright  to  Grermany  but 
merely  leased  for  a  term  of  ninety-nine  years  and  with  the  express  reserva- 
tion to  China  of  her  sovereignty  over  the  territory  thus  leased.  Dr.  John 
C.  Ferguson,  in  his  testimony  before  Committee  on  Foreign  Affairs  of  the 
United  States  Senate,  in  answer  to  the  question  as  to  the  theory  under 
which  China  could  claim  that,  by  her  Declaration  of  War  against  Ger- 
many, *  her  agreement  to  transfer  the  German  rights  to  Japan,  had  become 
inoperative,  said :  "  May  I  say  that  in  that  matter  the  Chinese  Govern- 
ment took  the  advice  of  two  eminent  French  international  lawyers.  If  the 
Committee  will  excuse  me  from  mentioning  names,  I  wiU  not  mention 
names,  but  I  am  stating  what  is  within  my  own  individual  knowledge, 
€hat  she  took  the  advice  of  two  eminent  French  international  lawyers,  of 
the  most  eminent  Russian  jurist  who  was  known  to  the  President  of  the 
Board  of  Foreign  Affairs,  who  had  formerly  been  Minister  in  St.  Peters- 
burg; of  an  eminent  Dutch  jurist  of  Holland,  and  of  an  eminent  inter- 
national jurist  from  Belgium,  and  based  her  claim  on  the  advice  which 
was  given  to  her  by  those  jurists,  that  is,  that  her  declaration  of  war 
against  CJermany,  notwithstanding  her  contract  .which  had  already  been 
made  in  1915  with  Japan,  of  itself  vitiated  not  only  the  German  lease 
but  also  the  treaty  with  Japan."  Asked  if  that  was  the  unanimous 
opinion  of  the  jurists  consulted.  Dr.  Ferguson  replied  that  it  was. 

For  the  text  of  a  collective  note  of  the  diplomatic  representatives  of  the 
Allies  at  Peking  to  the  Chinese  Foreign  Office  setting  forth  certain  advan- 
tages which  their  governments  were  disposed  to  accord  to  China  in  recog- 
nition of  her  entrance  into  the  war,  see  MacMurray,  note  to  No.  1917/7. 


JAPAN'S  POSITION  IN  SHANTUNG  393 

signatory  to  the  Versailles  Treaty  of  Peace  of  1919 
appeared  to  accept  the  view  that  the  German  treaty  rights 
in  Shantung  were  still  in  existence  and,  therefore,  might 
be  subjects  of  treaty  disposition.  If,  therefore,  China 
had  signed  the  Versailles  Treaty,  there  would  have  been 
no  ground  upon  which  she  could  have  continued  to  claim 
that  these  rights  had  gone  out  of  existence  at  the  time 
that  she  declared  abrogated  all  existing  treaties  and 
agreements  between  herself  and  Germany.  As  it  is,  the 
point  is  one  that  may  yet  be  raised  by  China  should  she 
deem  it  politic  to  do  so.^* 

Agreements  of  September  24,  1918.  The  various  acts 
of  Japan  in  Shantung  had  not  failed  to  arouse  consider- 
able opposition  upon  the  part  of  the  people  of  that 
province  as  well  as  from  the  authorities  at  Peking.  The 
Chinese  Government  was,  however,  in  no  military  or 
financial  position  to  enforce  its  rights  and  was  therefore 
compelled  on  September  24,  1918,  to  make  important 
concessions  to  Japan  in  return  for  certain  promises  upon 
its  part.  This  arrangement  between  the  two  countries 
was  embodied  in  a  series  of  notes,  dated  September  24, 
1918,  exchanged  between  the  Japanese  Minister  for 
Foreign  Affairs  and  the  Chinese  Minister  at  Tokyo.^^ 

"  By  a  presidential  mandate,  approved  by  the  Peking  Parliament,  the 
Chinese  Government  in  September,  1919,  declared  at  an  end  the  war 
against  Germany,  but  there  has  been  no  treaty  of  peace  with  Germany 
fixing  the  future  relations  of  the  two  countries. 

"  MacMurray,  No.  1918/13.  These  notes  together  with  the  formal  loan 
agreement  of  September  28,  1918,  relating  to  the  Tsinanfu-Shuntehfu  and 
Kaomi-Hsuchow  extensions  of  the  Shantung  Railway,  presently  to  be  men- 
tioned, were  not  made  public  until  February,  1919,  when,  at  the  Paris 
Conference,  the  production  of  any  secret  engagements  that  might  exist  was 
asked  for  by  the  other  Powers. 


394      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Baron  Goto,  on  behalf  of  the  Japanese  Government, 
wrote : 

In  view  of  the  friendly  relations  existing  between  your  country 
and  Japan,  and  in  pursuance  of  the  spirit  of  harmony  and  recon- 
cihation,  the  Imperial  Government  considers  it  proper  that  the 
various  questions  in  Shantung  should  be  arranged  in  the  following 
manner,  and  has  decided  to  bring  the  matter  to  the  notice  of  your 
Government : — 

With  regard  to  the  Japanese  troops  stationed  along  the  Kiaochow- 
Tsinan  Railway,  all  the  troops  shall  be  concentrated  at  Tsingtao 
except  for  the  stationing  of  a  detachment  at  Tsinan. 

The  guarding  of  the  Kiaochow-Tsinan  Railway  is  to  be  under- 
taken by  your  Government  by  the  organization  of  a  police  force 
for  the  purpose. 

The  expenditure  required  for  the  maintenance  of  the  poHce  force 
shall  be  defrayed  by  the  Kiaochow-Tsinan  Railway. 

Japanese  shall  he  engaged  for  the  headquarters  of  this  police 
force,  at  the  principal  railway  stations  and  at  the  police  training 
;=chool. 

Chinese  arc  to  be  engaged  as  employees  on  the  Kiaochow-Tsinan 
Railway. 

When  the  status  of  the  Kiaochow-Tsinan  Railway  shall  have 
been  established  it  shall  be  conjointly  worked  by  Japanese  and 
Chinese. 

The  Civil  Administration  now  in  force  shall  be  abolished. 

To  this  note  the  Chinese  Minister  replied  with, the 
statement  that  the  Chinese  Government  gladly  agreed  to 
its  provisions,  but  the  agreement  or  arrangement  was 
never  ratified  by  the  Parliament  at  Peking,  and  the 
Chinese  people,  with  practical  unanimity,  have  denied  its 
binding  force. 

Japanese  Gain  Additional  Railway  Concessions  in  Shan- 
tung. At  this  same  time  also  notes  were  exchanged 
between  the  Chinese  Minister  at  Tokyo  and  the  Japanese 


JAPAN'S  POSITION  IN  SHANTUNG  395 

Minister  for  Foreign  Affairs  by  which  Japanese  interests 
were  promised  the  right  to  build,  for  the  account  of  the 
Chinese  Government,  extensions  of  the  Tsjngtao-Tsinan 
Railway  from  Kaomi  to  Hsuchowfu  and  from  Tsinanfu 
to  Shuntehfu.  These  extensions,  it  is  to  be  observed, 
were  the  same  as  those  which  had  been  granted  to  Ger- 
man interests  by  an  exchange  of  notes  of  December  31, 
1913. 

On  September  29,  1918,  a  contract  ^®  was  signed 
between  a  syndicate  of  Japanese  financial  interests  and 
the  Chinese  Minister  at  Tokyo  according  to  which  the 
sum  of  20,000,000  yen  was  to  be  immedately  advanced  to 
the  Chinese  Government  for  the  building  of  these  railway 
extensions. 

Upon  this  same  date  was  signed  also  the  agreement 
for  the  financing  of  the  additional  railways  in  Manchuria 
which  have  been  earlier  mentioned. 

War  Participation  Loan.  Also,  on  the  same  date,  Sep- 
tember 28,  1918,  was  signed  by  the  Chinese  Minister  at 
Tokyo  and  the  Japanese  Minister  for  Foreign  Affairs 
the  so-called ' '  War  Participation ' '  loan  contract,^^  which 
called  for  the  underwriting  by  Japanese  financial  interests 
of  20,000,000  yen  Chinese  Government  treasury  certifi- 
cates. This  financial  undertaking  was  declared  to  be  ' '  in 
accordance  with  the  object  of  the  Sino-Japanese  military 
co-operation  agreement ' ' — an  agreement  that  Avill  later 
be  referred  to  ^* — the  purpose  being  to  provide  funds  for 

"  For  translation  of  this  contract  and  of  the  exchange  of  notes  on  which 
it  was  based,  see  MacMurray,  No.  1918/16. 

"  For  translation  of  this  loan  contract  and  accompanying  docunaents, 
see  MacMurray,  No.  1918/14. 

"  See  post,  p.  422, 


396      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  Chinese  Government  *'  for  organizing  a  defensive 
army  so  as  to  be  able  to  fulfil  its  co-operative  duties,  and 
also  because  of  the  expenses  in  participating  in  the  war," 
that  is  the  Great  War.^* 

China  at  the  Paris  Peace  Conference.  The  facts  which 
have  been  set  forth  show  the  rights  in  Shantung  pos- 
sessed by  Germany  or  Japan  at  the  time  of  the  convening 
of  the  Powers  at  Paris  for  determining  the  conditions  of 
peace  to  be  presented  to  the  Central  European  Powers. 

Upon  the  face  of  the  documents  which  have  been 
described  or  quoted  it  is  seen  that  Japan  had  a  legal  or 
contractual  right  to  remain  in  possession  of  the  former 
German  rights  in  Shantung  if  the  Powers  were  willing 
to  hold  China  to  her  agreements  of  1915  notwithstanding 
the  circumstances  under  which  they  were  exacted  of  her 
by  Japan.  By  the  treaties  of  1915  China  had  explicitly 
agreed  to  this,  Japan  upon  her  part  making  certain  con- 
ditional promises  regarding  the  return  of  the  leased  area 
of  Kiaochow  to  China.  And,  as  to  the  Tsingtao-Tsin- 
anfu  Eailway,  which  has  been  the  property  of  a  German 
corporation  and  therefore  might  conceivably  have  been 
deemed  not  to  be  public  property  to  which  the  Japanese 
might  take  title,  the  notes  of  September  24,  1918,  looked 
to  the  transformation  of  this  railway  company  into  a 
joint  Sino-Japanese  enterprise.  Thus,  as  a  purely  tech- 
nical proposition,  all  that  appeared  to  be  necessary  in 
order  to  perfect  Japan's  title  to  the  Shantung  rights  was 
that  Germany,  in  the  treaty  of  peace,  should  give  her 

"  In  fact  the  funds  were  used  to  support  the  northern  military  party  in 
its  contest  with  the  southern  or  seif-styled  "  Constitutional "  party  with 
its  headquarters  at  Canton. 


JAPAN'S  POSITION  IN  SHANTUNG  397 

assent  to  the  transfer — an  assent  which  she  had  no  power 
to  give  nnder  the  Lease  Convention  of  1898,  but  which 
could  be  given  under  the  Sino-Japanese  agreements  of 
1915,  provided  they  were  held  to  be  valid. 

Against  this  final  disposition  of  the  German  rights  in 
Shantung,  the  Chinese  delegates  to  the  Paris  Conference 
advanced  two  legal  propositions:  (1)  that  the  German 
rights  had  gone  out  of  existence  at  the  time  that  China 
declared  the  abrogation  of  all  treaties  between  herself 
and  Germany;  and  (2)  that  the  agreements  of  1915  should 
be  held  void  because  of  the  circumstances  under  which 
China's  consent  to  them  had  been  obtained. 

It  cannot  be  maintained  that  these  two  propositions 
were  of  conclusive  weight  if  judged  purely  from  the 
standpoint  of  technical  public  law.  The  real  strength  in 
China's  case  was  upon  its  ethical  side. 

Especially  China  hoped  for  the  support  of  the  Ameri- 
can delegation  in  view  of  the  long  established  policy  of 
that  country  in  the  Far  East,  as  well  as  of  the  fact 
rhat  China  had  entered  the  war  upon  suggestion  of  the 
American  Government.  As  to  the  Entente  Powers,  what- 
ever hopes  China  may  have  had  of  their  favorable  action 
or  influence  were  soon  shown  to  be  futile  because  of 
certain  engagements,  which  it  now  transpired,  they  had 
entered  into  early  in  1917  with  Japan.^** 

Secret  Engagements  of  1917  of  the  Entente  Powers  with 
Japan.  On  February  16,  1917,  the  British  Ambassador 
at  Tokyo  sent  to  the  Japanese  Minister  for  Foreign 
Affairs  a  letter  in  which,  after  referring  to  the  fact  that 
the   Japanese    Government   had   asked  for   assurances 

*•  MacMurray,  notes  to  1914/9. 


398      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

regarding  Japan's  succession  to  the  German  rights  in 
Shantung,  he  said : 

His  Britannic  Majesty's  Government  accede  with  pleasure  to 
request  of  the  Japanese  Government  for  an  assurance  that  they  will 
support  Japan's  claims  in  regard  to  the  disposal  of  Germlany's  rights 
in  Shantung  and  possessions  in  the  islands  north  of  the  equator  on 
rhe  occasion  of  the  Peace  Conference ;  it  being  understood  that  the 
Japanese  Government  will  in  the  eventual  peace  settlement  treat 
in  the  same  spirit  Great  Britain's  claims  to  the  German  Islands 
south  of  the  equator. 

On  February  19,  the  Japanese  Minister  sent  to  the 
French  and  Russian  Ambassadors  at  Tokyo  a  note  in 
which,  after  some  introductory  statements,  he  said: 

The  Imperial  Japanese  Government  believes  that  the  moment 
has  come  for  it  also  to  express  its  desires  relative  to  certain  con- 
ditions of  peace  essential  to  Japan  and  to  submit  them  for  the 
consideration  of  the  Government  of  the  French  Republic  [Empire 
of  Russia]. 

The  French  [Russian]  Government  is  thoroughly  informed  of 
all  the  efforts  the  Japanese  Government  has  made  in  a  general 
manner  to  accomplish  its  task  in  the  present  war,  and  particularly 
to  guarantee  for  the  future  the  peace  of  Oriental  Asia  and  the 
security  of  the  Japanese  Empire,  for  which  it  is  absolutely  neces- 
sary to  take  from  Germany  its  bases  of  political,  military  and 
economic  activity  in  the  Far  East. 

Under  these  conditions  the  Imperial  Japanese  Government  pro- 
poses to  demand  from  Germany  at  the  time  of  the  peace  negotia- 
tions the  surrender  of  the  territorial  rights  and  special  interests 
Germany  possessed  before  the  war  in  Shantung  and  the  islands 
situated  north  of  the  equator  in  the  Pacific  Ocean. 

The  Imperial  Government  confidently  hopes  the  Government  of 
the  French  Republic,  [Russia]  realizing  the  legitimacy  of  these 
demands,  will  give  assurance  that,  her  case  being  proved,  Japan 
may  count  upon  its  full  support  on  this  question. 

It  goes  without  saying  that  reparation  for  damages  caused  to 


JAPAN'S  POSITION  IN  SHANTUNG  399 

the  life  and  property  of  the  Japanese  people  by  the  unjustifiable 
attacks  of  the  enemy,  as  well  as  other  conditions  of  peace  of  a 
character  common  to  all  the  Entente  powers,  are  entirely  outside 
the  consideration  of  the  present  question.-^ 

Replying  to  this  communication,  the  French  Ambas- 
sador, on  March  1,  said : 

The  Government  of  the  French  Kepublic  is  disposed  to  give  the 
Japanese  Government  its  accord  in  regulating  at  the  time  of  the 
peace  negotiations  questions  vital  to  Japan  concerning  Shantung 
and  the  German  Islands  in  the  Pacific  north  of  the  equator.  It 
also  agrees  to  support  the  demands  of  the  Imperial  Japanese  Gov- 
ernment for  the  surrender  of  the  rights  Germany  possessed  before 
the  war  in  the  Chinese  province  and  these  islands. 

M.  Briand  demands,  on  the  other  hand,  that  Japan  give  its  sup- 
port to  obtain  from  China  the  breaking  of  the  diplomatic  relations 
with  Germany,  and  that  it  give  this  act  desirable  significance.^* 

The  consequences  of  this  in  China  should  be  the  following : 

First — Handing  passports  to  the  German  diplomatic  agents  and 
consuls. 

Second — The  obligation  of  all  under  German  jurisdiction  to 
leave  Chinese  territory. 

Third — ^The  internment  of  German  ships  in  Chinese  ports  and 
the  ultimate  requisition  of  these  ships  in  order  to  place  them  at 
the  disposition  of  the  Allies  following  the  example  of  Italy  and 
Portugal.  According  to  the  information  of  the  French  Government 
there  are  fifteen  Gernjan  ships  in  Chinese  ports  totaling  about 
40,000  tons. 

Fourth — Requisition  of  Germjan  commercial  houses  established 

^  The  only  text  which  we  have  of  this  note  is  that  published  by  the 
Associated  Press,  and  there  is  internal  evidence  that  the  translating  is 
not  wholly  accurate.  The  clause  "  her  case  being  proved  "  which  occurs  in 
the  next  to  the  last  paragraph  of  the  Japanese  note  to  the  Russian  and 
French  Governments,  is  almost  surely  a  mistranslation. 

"Twice  earlier  Japan  had  vetoed  the  proposition  that  China  should 
enter  the  war  upon  the  Allied  side. 


400      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

in  China;  forfeiting  the  right  of  Germany  in  the  concessions  she 
possesses  in  certain  parts  of  China. 

Eussia,  on  February  20,  gave  to  Japan  the  assurances 
she  desired;  and  on  March  14  a  similar  assurance,  though 
in  a  different  manner,  was  given  by  Italy  to  the  Japanese 
Ambassador  at  Rome. 

President  Wilson's  Position.  It  is  known  that  President 
Wilson  was  very  unwilling  to  concede  to  Japan  her  claim 
to  the  German  rights  in  China,  but  that  he  felt  con- 
strained to  do  so  in  view  of  the  fact  that  Great  Britain, 
France,  and  Italy  all  held  themselves  obliged  to  make 
good  their  promises  to  Japan  and  that  Japan  insisted 
upon  their  fulfilment  and  threatened  to  withdraw  from 
the  Conference  in  case  this  was  not  done.^^ 

"It  is  also  known  that  the  other  members  of  the  American  Delegation 
to  the  Conference — Secretary  Lansing,  Grcneral  Bliss,  and  Mr.  White — 
had  advised  the  President  that,  in  tlieir  opinion,  Japan's  demands  should 
not  be  yielded  to.  Later,  Secretary  Lansing,  testifying,  on  August  6, 
1919,  before  the  Committee  on  Foreign  Relations  of  the  United  States 
Senate,  said: 

"Question.  Was  the  Shantung  decision  [in  the  "Council  of  Three"] 
made  in  order  to  have  the  Japanese  signatures  to  the  league  of  nations? 

"  Answer.     That  I  cannot  say. 

"  Question.     In  your  opinion  was  it? 

"  Answer.  I  would  not  want  to  say  that,  because  I  really  have  not  the 
facts  on  which  to  form  an  opinion  along  that  line. 

"  Question.  Would  the  Japanese  signatures  to  the  League  of  Nations 
have  been  obtained  if  yon  had  not  marie  the  Shantung  agreement? 

"  Answer,     I  think  so. 

"Question.    You  do? 

"Answer.     I  think  so. 

"  Question.  So  that  even  though  Shantung  had  not  been  delivered  to 
Japan,  the  League  of  Xations  would  not  have  been  injured? 

"  Answer.     I  do  not  think  bo. 

"  Question.  And  you  would  have  had  the  same  signatures  that  you 
have  now? 

"  Answer.     Yes ;  one  more,  China. 


JAPAN'S  POSITION  IN  SHANTUNG  401 

The  Treaty  of  Peace:  Shantung  Provisions.  The  section 
of  the  Treaty  of  Peace,  as  finally  signed,  dealing  with  the 
status  of  Shantung,  reads  as  follows : 

Article  156.  (jermany  renounces  in  favor  of  Japan,  all  her 
rights,  title,  and  privileges — particularly  those  concerning  the  terri- 
tory of  Kiaochow,  railways,  mines  and  submarine  cables — ^which  she 

"  Question.  One  more,  China.  So  that  the  result  of  the  Shantung 
decision  was  simply  to  lose  China's  signature  rather  than  to  gain  Japan's? 

"  Answer.    That  is  my  personal  view,  but  I  may  be  wrong  about  it. 

"Question.  Why  did  you  yield  on  a  question  on  which  you  thought 
you  ought  not  to  yield  and  that  you  thought  was  a  principle? 

"Answer.  Because  naturally  we  were  subject  to  the  direction  of  the 
President  of  the  United  States. 

"Question.  And  it  was  solely  because  you  felt  that  you  were  subject 
to  the  decision  of  the  President  of  the  United  States  that  you  yielded? 

"  Answer.    Yes." 

In  a  Conference  held  at  the  White  House  on  August  19,  1919,  between 
the  President  and  Members  of  the  Senate  Committee,  the  President's  atten- 
tion was  called  to  the  statement  by  his  Secretary  of  State  that  in  his,  the 
Secretary's,  opinion  Japan  would  have  signed  even  though  her  demands 
with  regard  to  Shantung  had  not  been  satisfied.  To  this  the  President 
replied,  "  Well,  my  conclusion  is  diflferent  from  his."  The  following  ques- 
tions and  answers  ensued: 

"  Question.  You  could  not  have  got  the  signature  of  Japan  if  you  had 
not  given  Shantung  to  Japan? 

"  Answer.     That  is  my  judgment. 

"Question.     You  say  you  were  notified  to  that  effect? 

"  Answer.     Yes,  sir. 

"  Question.  As  I  understand,  you  were  notified  that  they  [the  Japan- 
ese Delegates]  had  instructions  not  to  sign  unless  this  was  included. 

"  Answer.    Yes. 


"  Question.  You  would  have  much  preferred  to  have  a  different  disposi- 
tion, notwithstanding  the  promise  of  Japan  in  the  treaty,  would  you  not? 

"  Answer.     Yes,  sir." 

At  this  same  Conference,  the  President  when  asked  when  he  first  learned 
of  the  agreements  which  the  Entente  Powers  had  made  with  Japan  in  1917 
with  regard  to  German  interests  in  the  Far  East,  replied  that  they  had 
been  disclosed  to  him  for  the  first  time  after  he  reached  Paris.  Asked  if 
that  was  the  first  knowledge  of  them  obtained  by  the  American  Govern- 
ment he  replied  that  it  was  unless  there  was  information  in  the  Depart- 
ment of  State  of  which  he  knew  nothing. 

26 


402      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

acquired  in  virtue  of  the  Treaty  concluded  by  her  with  China  on 
March  6,  1898,  and  of  all  other  arrangements  relative  to  the  Pro- 
vince of  Shantung, 

All  German  rights  in  the  Tsingtao-Tsinanfu  Railway,  including 
its  branch  lines,  together  with  its  subsidiary  property  of  all  kinds, 
stations,  shops,  fixed  and  rolling  stock,  mines,  plant  and  material 
for  the  exploitation  of  the  mines,  are  and  remain  acquired  by  Japan, 
together  with  all  rights  and  privileges  attaching  thereto. 

The  German  submarine  cables  from  Shanghai  and  from  Tsingtao 
to  Chefoo,  with  all  the  rights,  privileges  and  properties  attaching 
thereto,  are  similarly  acquired  by  Japan,  free  and  clear  of  all 
charges  and  encumbrances. 

Article  157.  The  movable  and  immovable  property  owned  by 
the  German  State  in  the  territory  of  Kiaochow,  as  well  as  all  the 
rights  which  Germany  might  claim  in  consequence  of  the  works  or 
improvements  made  or  of  the  expenses  incurred  by  her,  directly 
or  indirectly,  in  connection  with  this  territory,  are  to  remain 
acquired  by  Japan,  free  and  clear  of  all  charges  and  encumbrances. 

Article  158.  Germany  shall  hand  over  to  Japan  within  three 
months  from  the  coming  into  force  of  the  present  Treaty,  the 
archives,  registers,  plans,  title-deeds  and  documents  of  every  kind, 
wherever  they  may  be,  relating  to  the  administration,  whether  civil 
or  military,  financial,  judicial  or  other,  of  the  territory  of  Kiaochow, 

Within  the  same  period  Germany  shall  give  particulars  to  Japan 
of  all  treaties,  arrangements  or  agreements  relating  to  the  rights, 
title  or  privileges  referred  to  in  the  two  preceding  articles. 

The  Treaty  of  Peace:  German  Rights  and  Interests  in 
China  Other  Than  Those  in  Shantung.  The  following  are 
the  provisions  of  the  Paris  Treaty  of  1919  which  relate 
specifically  to  German  rights  and  interests  in  China  other 
than  those  in  Shantung :  ^* 

Article  118.  In  territory  outside  her  European  frontiers  as 
fixed  by  the  present  Treaty,  Germany  renounces  all  rights,  titles 

**  See  post.  Chap.  XVIII  for  the  provision  of  the  Paris  Treaty  with  refer- 
ence to  opium. 


JAPAN'S  POSITION  IN  SHANTUNG  403 

and  privileges  whatever  in  or  over  territory  which  belonged  to  her 
or  to  her  allies,  and  all  rights,  titles  and  privileges  whatever  their 
origin  which  she  held  as  against  the  Allied  and  Associated  Powers. 
Germany  hereby  undertakes  to  recognize  and  to  conform  to  the 
measures  which  may  be  taken  now  or  in  the  future  by  the  Prin- 
cipal Allied  and  Associated  Powers,  in  agreement  where  necessary 
with  third  Powers,  in  order  to  carry  the  above  stipulation  into 
eifect. 

Article  128.  Germany  renounces  in  favour  of  China  all  benefits 
and  privileges  resulting  from  the  provisions  of  the  final  Protocol 
signed  at  Peking  on  September  7,  1901,  and  from  all  annexes,  notes 
and  documents  supplementary  thereto.  She  likewise  renounces  in 
favour  of  China  any  claim  to  indemnities  accruing  thereunder  sub- 
sequent to  March  14,  1917. 

Article  129.  From  the  coming  into  force  of  the  present  Treaty 
the  High  Contracting  Parties  shall  apply,  in  so  far  as  concerns 
them  respectively : 

(1)  The  Arrangement  of  August  29,  1902,  regarding  the  new 
Chinese  customs  tariff; 

(2)  The  Arrangement  of  September  27, 1905,  regarding  Whang- 
Poo,  and  the  provisional  supplementary  Arrangement  of  April  4, 
1912. 

China,  however,  will  no  longer  be  bound  to  grant  to  Germany 
the  advantages  or  privileges  which  she  allowed  Germany  under 
these  Arrangements. 

Article  130.  Subject  to  the  provisions  of  Section  VIII  of  this 
Part,  Germany  cedes  to  China  all  the  buildings,  wharves  and  pon- 
toons, barracks,  forts,  arms  and  munitions  of  war,  vessels  of  all 
kinds,  wireless  telegraph  installations  and  other  public  property 
belonging  to  the  German  Government,  which  are  situated  or  may 
be  in  the  German  Concessions  at  Tientsin  and  Hankow  or  elsewhere 
in  Chinese  territory. 

It  is  understood,  however,  that  premises  used  as  diplomatic  or 
consular  residences  or  offices  are  not  included  in  the  above  cession, 
and,  furthermore,  that  no  steps  shall  be  taken  by  the  Chinese  Gov- 
ernment to  dispose  of  the  German  public  and  private  property 


404      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

situated  within  the  so-called  Legation  Quarter  at  Peking  without 
the  consent  of  the  Diplomatic  Eepresentatives  of  the  Powers  which, 
on  the  coming  into  force  of  the  present  Treaty,  remain  Parties  to 
the  Final  Protocol  of  September  7,  1901. 

Article  131.  Germany  undertakes  to  restore  to  China  within 
twelve  months  from  the  coming  into  force  of  the  present  Treaty 
all  the  astronomical  instruments  which  her  troops  in  1900-1901 
carried  away  from  China,  and  to  defray  all  expenses  which  may  be 
incurred  in  effecting  such  restoration,  including  the  expenses-  of 
dismounting,  packing,  transporting,  insurance  and  installation  in 
Peking. 

Article  132.  Germany  agrees  to  the  abrogation  of  the  leases 
from  the  Chinese  Government  under  which  the  German  Concessions 
at  Hankow  and  Tientsin  are  now  held. 

China,  restored  to  the  full  exercise  of  her  sovereign  rights  in  the 
above  areas,  declares  her  intention  of  opening  them  to  international 
residence  and  trade.  She  further  declares  that  the  abrogation  of 
the  leases  under  which  these  concessions  are  now  held  shall  not 
affect  the  property  rights  of  nationals  of  Allied  and  Associated 
Powers  who  are  holders  of  lots  in  these  concessions. 

Article  133.  Germany  waives  all  claims  against  the  Chinese 
Government  or  against  any  Allied  or  Associated  Government  arising 
out  of  the  internment  of  German  nationals  in  China  and  their 
repatriation.  She  equally  renounces  all  claims  arising  out  of  the 
capture  and  condemnation  of  German  ships  in  China,  or  the  liqui- 
dation, sequestration  or  control  of  German  properties,  rights  and 
interests  in  that  country  since  August  14,  1917.  This  provision, 
however,  shall  not  affect  the  rights  of  the  parties  interested  in  the 
proceeds  of  any  such  liquidation,  which  shall  be  governed  by  the 
provisions  of  Part  X  (Economic  Clauses)  of  the  present  Treaty. 

Article  134.  Germany  renounces  in  favour  of  the  Government 
of  His  Britannic  Majesty  the  German  State  property  in  the  British 
Concession  at  Shamieen  at  Canton.  She  renounces  in  favour  of  the 
French  and  Chinese  Governments  conjointly  the  property  of  the 
German  school  situated  in  the  French  Concession  at  Shanghai. 

Article  260.    Without  prejudice  to  the  renunciation  of  any 


JAPAN'S  POSITION  IN  SHANTUNG  405 

rights  by  Germany  on  behalf  of  herself  or  of  her  nationals  in  the 
other  provisions  of  the  present  Treaty,  the  Eeparation  Commission 
may  within  one  year  from  the  coming  into  force  of  the  present 
Treaty  demand  that  the  German  Government  become  possessed  of 
any  rights  and  interests  of  German  nationals  in  any  public  utility 
undertaking  or  in  any  concession  operating  in  Eussia,  China, 
Turkey,  Austria,  Hungary  and  Bulgaria,  or  in  the  possessions  or 
dependencies  of  these  States  or  in  any  territory  formerly  belonging 
to  Germany  or  her  allies,  to  be  ceded  by  Gerniany  or  her  allies  to 
any  Power  or  to  be  administered  by  a  Mandatory  under  the  present 
Treaty,  and  may  require  that  the  German  Government  transfer, 
within  six  months  of  the  date  of  demand,  all  such  rights  and  inter- 
ests and  any  similar  rights  and  interests  the  German  Government 
may  itself  possess  to  the  Eeparation  Commlission. 

Germany  shall  be  responsible  for  indemnifying  her  nationals  so 
dispossessed,  and  the  Eeparation  Commission  shall  credit  Ger- 
many, on  account  of  sums  due  for  reparation,  with  such  sums  in 
respect  of  the  value  of  the  transferred  rights  and  interests  as  may 
be  assessed  by  the  Eeparation  Commission,  and  the  German  Gov- 
ernment shall,  within  six  months  from!  the  coming  into  force  of  the 
present  Treaty,  communicate  to  the  Eeparation  Commission  all 
such  rights  and  interests,  whether  already  granted,  contingent  or 
not  yet  exercised,  and  shall  renounce  on  behalf  of  itself  and  its 
nationals  in  favour  of  the  Allied  and  Associated  Powers  all  such 
rights  and  interests  which  have  not  been  so  communicated. 

China  Refuses  to  Sign  the  Treaty  of  Peace  with  Germany. 

The  Chinese  delegates,  upon  instructions  from  their  Gov- 
ernment, refused  to  sign  the  Treaty  of  Peace  because  of 
Articles  156, 157,  and  158.  On  May  4,  the  delegation  had 
sent  to  the  Council  of  Prime  Ministers  a  formal  protest 
regarding  the  action  that  was  contemplated  by  the  Coun- 
cil, and  on  May  6  filed  a  reservation  at  the  Plenary  Ses- 
sion of  the  Conference,  with  regard  to  the  future  status  of 
the  German  rights  in  China.  On  May  26,  the  Chinese 
delegation  formally  notified  the  other  Powers  that  China 


406      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

would  sign  the  treaty  subject  to  this  reservation.  This, 
they  were  informed,  they  would  not  be  permitted  to  do. 
The  delegation  then  asked  that  the  reservation  be  made 
an  **  annex  "  to  the  treaty.  This  permission  was  also 
denied.  This  reservation  was  to  the  effect  that,  by 
signing  the  treaty,  China  should  not  be  precluded  from 
demanding  at  a  suitable  moment  the  reconsideration  of 
the  Shantung  question. 

Earlier  in  the  conference  the  Chinese  had  offered  to 
accept  an  arrangement  under  which  the  German  rights  in 
Shantung  should  be  ceded  to  Japan,  provided  the  Council 
of  Four  [Great  Britain,  the  United  States,  France  and 
Italy]  was  made  joint  trustee,  and  the  promise  given  that 
Shantung  and  Tsingtao  would  be  returned  to  China 
within  a  year.  In  this  case  China  would  agree  to  repay 
to  Japan  the  expenses  incurred  in  capturing  Tsingtao 
from  the  Germans,  and  to  make  that  city  an  international 
port  during  the  time  that  other  foreign  **  settlements  '' 
might  exist  in  China.  This  compromise  was  rejected, 
Japan  having  asserted  that  it  would  not  be  acceptable 
to  her. 

Japan's  Promise  to  Restore  Shantung  to  China.  Although 
the  Treaty  of  Peace  contains  no  provision  to  that  effect, 
it  has  been  stated  by  President  Wilson,  and  acknowledged 
by  the  Japanese  Foreign  Office,  that  at  Paris  the  Japa- 
nese delegation  gave  an  oral  undertaking  to  restore  to 
China  all  of  the  German  rights  in  Shantung  which  she 
was  to  receive  except  those  of  an  economic  character,  and 
the  right  to  establish  a  **  concession  "  at  Tsingtao.  It 
would  appear,  however,  that  already  there  is  a  difference 
of  opinion  on  the  part  of  President  Wilson  and  of  the 


JAPAN'S  POSITION  IN  SHANTUNG  407 

Japanese  Minister  for  Foreign  Affairs  as  to  precisely 
what  the  Japanese  had  undertaken  to  return,  and  under 
what  conditions. 

President  Wilson  at  the  conference  with  members  of  the 
Conunittee  on  Foreign  Relations  of  the  Senate,  held  at 
the  White  House  on  August  19,  1919,  when  asked  as  to 
the  promise  that  Japan  had  made,  said:  **I  cannot  be 
confident  that  I  can  quote  it  literally,  but  I  know  that  I 
can  quote  it  in  substance.  It  was  that  Japan  should 
return  to  China  in  full  sovereignty  the  old  Province  of 
Shantung  so  far  as  Germany  had  had  any  claims  upon  it, 
preserving  to  herself  the  right  to  establish  a  residential 
district  at  Tsingtao,  which  is  the  town  on  Kiaochow  Bay ; 
that  with  regard  to  the  railways  and  mines  she  should 
retain  only  the  rights  of  an  economic  concession  there, 
with  the  right,  however,  to  maintain  a  special  body  of 
police  on  the  railway,  the  personnel  of  which  should  be 
Chinese  under  Japanese  instructors  nominated  by  the 
managers  of  the  [railway]  company  and  appointed  by 
the  Chinese  Government.    I  think  that  is  the  whole  of  it." 

Asked  if  the  understanding  was  oral,  the  President 
said  that  it  was  ''  technically  oral,  but  literally  written 
and  formulated,  and  the  formulation  agreed  upon.'' 

Asked  further  when  the  return  of  the  Shantung  rights 
to  China  was  to  be  made,  the  President  replied :  * '  That 
was  left  undecided,  but  we  were  assured  at  the  time  that 
it  would  be  as  soon  as  possible.  "^^ 

President  Wilson  Corrects  Viscount  Uchida*s  Version  of 
the  Agreement.  In  August,  1919,  the  Japanese  Minister 
for  Foreign  Affairs,  Viscount  Uchida,  issued  the  follow- 

*  Congressional  Record,  August  20,  1919. 


408      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ing  statement  as  to  the  understanding  of  his  Government 
with  regard  to  the  promises  that  had  been  made  at  Paris, 
and  the  intentions  of  his  Government  in  the  premises : 

It  appears  that,  in  spite  of  the  official  statement  which  the  Japan- 
ese Delegation  at  Paris  issued  on  May  5  last,  and  which  I  fully 
stated  in  an  interview  with  the  representatives  of  the  press  on  May 
17,  Japan's  poHcy  respecting  the  Shantung  question  is  Httle  under- 
stood or  appreciated  abroad. 

It  will  be  remembered  that  in  the  ultimatum  which  the  Japanese 
Government  addressed  to  the  German  Governm|ent  on  August  15, 
1914,  they  demanded  of  Germany  to  dehver,  on  a  date  not  later 
than  September  15,  1914,  to  the  Imperial  authorities,  without  con- 
dition of  compensation,  the  entire  leased  territory  of  Kiao-Chau 
with  a  view  to  eventual  restoration  of  the  same  to  China.  The 
terms  of  that  demand  have  never  elicited  any  protest  on  the  part  of 
China  or  any  other  allied  or  associated  Powers. 

Following  the  same  line  of  policy,  Japan  now  claims  as  one  of 
the  essential  conditions  of  peace  that  the  leased  territory  of  Kiao- 
Chau  should  be  surrendered  to  her  without  condition  or  compensa- 
tion. At  the  same  tim,e  abiding  faithfully  by  the  pledge  which  she 
gave  to  China  in  1915,  she  is  quite  willing  to  restore  to  China  the 
whole  territory  in  question  and  to  enter  upon  negotiations  with  the 
Government  at  Peking  as  to  the  arrangement  necessary  to  give 
effect  to  that  pledge  as  soon  as  possible  after  the  treaty  of  Versailles 
shall  have  been  ratified  by  Japan. 

Nor  has  she  any  intention  to  retain  or  to  claim  any  rights  which 
affect  the  territorial  sovereignty  of  China  in  the  province  of  Shan- 
tung. The  significance  of  the  clause  appearing  in  Baron  Makino's 
statement  of  May  5,  that  the  policy  of  Japan  is  to  hand  back  the 
Shantung  peninsula  in  full  sovereignty  to  China,  retaining  only 
the  economic  privileges  granted  to  Gernxany,  must  be  clear  to  all. 

Upon  arrangement  being  arrived  at  between  Japan  and  China 
for  the  restitution  of  Kiao-Chau,  the  Japanese  troops  at  present 
guarding  that  territory  and  the  Kiao-Chau-Tsinanfu  Railway  will 
be  completely  withdrawn. 

The  Kiao-chau-Tsinanfu  Railway  is  intended  to  be  operated  as  a 


JAPAN'S  POSITION  IN  SHANTUNG  4=09 

joint  Sino-Japanese  enterprise  without  any  discrimination  in  treat- 
ment against  the  people  of  any  nation. 

The  Japanese  Government  have,  moreover,  under  contemplation 
proposals  for  the  re-estahlishnient  in  Tsingtao  of  a  general  foreign 
settlement,  instead  of  the  exclusive  Japanese  settlement  which  by 
the  agreement  of  1915  with  China  they  are  entitled  to  claim.-" 

This  statement  of  the  obligations  conceived  by  the 
Japanese  Government  to  have  been  imposed  upon  it  by 
the  promises  of  its  representatives  at  Paris,  by  no  means 
accorded  with  President  Wilson's  understanding  of  them, 
and  he  therefore  found  it  necessary,  on  August  6,  to  issue 
the  following  public  statement : 

The  Government  of  the  United  States  has  noted  with  the  greatest 
interest  the  frank  statement  made  by  Viscount  Uchida  with  regard 
to  Japan's  future  policy  respecting  Shantung,  The  statement 
ought  to  serve  to  remove  many  misunderstandings  which  had  begun 
to  accumulate  about  this  question. 

But  there  are  references  in  the  statement  to  an  agreement  entered 
into  between  Japan  and  China  in  1915  which  might  be  misleading 
if  not  commented  upon  in  the  light  of  what  occurred  in  Paris  when 
the  clauses  of  the  Treaty  affecting  Shantung  were  under  discussion. 
T  therefore  take  the  liberty  of  supplementing  Viscount  Uchida's 
statement  with  the  following : 

In  the  conference  of  the  30th  of  April  last,  where  this  matter 
was  brought  to  a  conclusion  am'ong  the  heads  of  the  principal  Allied 
and  Associated  powers,  the  Japanese  delegates.  Baron  Makino  and 
Viscount  Chinda,  in  reply  to  a  question  put  by  myself,  declared 
that: 

The  policy  of  Japan  is  to  hand  back  the  Shantung  peninsula  in 
full  sovereignty  to  China,  retaining  only  the  economic  privileges 

*'With  regard  to  this  possible  abandonment  of  an  exclusive  Japanese 
Settlement  at  Tsingtao  there  have  been  no  further  developments.  Viscount 
Uchida's  statement  upon  this  point  aroused  much  adverse  criticism  in  the 
Japanese  newspapers  and  from  his  political  opponents  in  Japan. 


410      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

granted  to  Germany,  and  the  right  to  establish  a  settlement  under 
the  usual  conditions  at  Tsingtao, 

The  owners  of  the  railway  will  use  special  police  only  to  insure 
security  for  traffic.    They  will  be  used  for  no  other  purpose. 

The  police  forces  will  be  composed  of  Chinese,  and  such  Japanese 
instructors  as  the  directors  of  the  railway  may  select  will  be  ap- 
pointed by  the  Chinese  Government. 

No  reference  was  made  to  this  policy  being  in  any  way  dependent 
upon  the  execution  of  the  agreement  of  1915  to  which  Count 
Uchida  appears  to  have  referred.  Indeed,  I  felt  it  my  duty  to  say 
that  nothing  that  I  agreed  to  must  be  construed  as  an  acquiescence 
on  the  part  of  the  Government  of  the  United  States  in  the  policy 
of  the  notes  exchanged  between  China  and  Japan  in  1915  and  1918, 
and  reference  was  made  in  the  discussion  to  the  enforcement  of  the 
agreements  of  1915  and  1918  only  in  case  China  failed  to  co-operate 
fully  in  carrying  out  the  policy  outlined  in  the  statement  of  Baron 
Makino  and  Viscount  Chinda. 

I  have,  of  course,  no  doubt  that  Viscount  Uchida  had  been  ap- 
prised of  all  the  particulars  of  the  discussion  in  Paris,  and  I  am 
not  making  this  statement  with  the  idea  of  correcting  his,  but  only 
to  throw  a  fuller  light  of  clarification  upon  a  situation  which  ought 
to  be  relieved  of  every  shadow  of  obscurity  or  misapprehension. 


CHAPTER  XIV 

Otheb  Japanese  Intebests  in  China 


Japanese  Sphere  in  Fukien.  There  is  nothing  in  the 
way  of  formal  support,  beyond  the  non-alienation  decla- 
ration of  China  in  1898,  to  support  the  contention  of 
the  Japanese  that  the  Province  of  Fukien  constitutes  a 
Japanese  Sphere  of  Interest. 

In  the  chapter  dealing  with  Extraterritoriality  the 
clearly  unjustifiable  attempts  upon  the  part  of  Japan  to 
establish  in  certain  places  in  Fukien,  and  especially  in 
Amoy,  so-called  ''police  boxes,"  were  discussed.  She 
has  also,  it  may  be  observed,  made  the  same  unauthorized 
attempts  in  Manchuria. 

Twenty-One  Demands  of  1915.  Though  not  mentioning 
the  province  by  name  the  following  demand  (Group  IV) 
contained  in  the  Twenty-one  Demands  of  1915  was  under- 
stood to  relate  especially  to  Fukien. 

'*  The  Japanese  Government  and  the  Chinese  Govern- 
ment with  the  object  of  effectively  preserving  the  terri- 
torial integrity  of  China  agree  to  the  following  special 
article : 

'*  The  Chinese  Government  engages  not  to  cede  or 
lease  to  a  third  Power  any  harbor  or  bay  or  island  along 
the  coast  of  China." 

This  was  the  demand  in  its  original  form.  As  revised, 
it  read: 

*  *  China  to  give  a  pronouncement  by  herself  in  accord- 
ance with  the  following  principle : 

411 


412      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

*'  No  bay,  harbor,  or  island  along  the  coast  of  China 
may  be  ceded  or  leased  to  any  Power. ' '  ^ 

In  the  exchange  of  notes  ^  which  were  of  even  date  with 
the  treaties  of  May  25, 1915,  resulting  from  Japan's  ulti- 
matum to  China,  the  Japanese  Minister  said : 

A  report  has  reached  me  to  the  effect  that  the  Chinese  Govern- 
ment has  the  intention  of  permitting  foreign  nations  to  establish, 
on  the  coast  of  Fukien  Province,  dockyards,  coahng  stations  for 
military  use,  naval  bases,  or  to  set  up  other  military  establishments ; 
and  also  of  borrowing  foreign  capital  for  the  purpose  of  setting  up 
the  above-mentioned  estabhshments.  I  have  the  honor  to  request 
that  Your  Excellency  [the  Chinese  Minister  of  Foreign  Affairs] 
will  be  good  enough  to  give  me  a  reply  stating  whether  or  not  the 
Chinese  Government  really  entertains  such  an  intention. 

In  reply,  the  Chinese  Minister  said : 

I  beg  to  inform  you  that  the  Chinese  Government  hereby  declares 
that  it  has  given  no  permission  to  foreign  nations  to  construct,  on 
the  coast  of  Fukien  Province,  dockyards,  coaling  stations  for  mili- 
tary use,  naval  bases,  or  to  set  up  other  military  establishments; 
nor  does  it  entertain  an  intention  of  borrowing  foreign  capital  for 
the  purpose  of  setting  up  the  above-mentioned  establishments. 

Here  there  is  no  engagement  on  the  part  of  the  Chinese 
Government  as  to  what  it  will  do  in  the  future  with  refer- 
ence to  dockyards,  coaling  stations,  etc.,  on  the  coast  of 
Fukien,  but,  as  a  matter  of  fact,  it  is  known  that  the 
Japanese  Government  would  consider  it  a  highly  un- 
friendly act  should  China  at  any  time  give  to  a  foreign 
Power  other  than  itself  a  foothold  of  any  kind,  of  military 
or  political  significance  in  the  province  or  on  the  coast  of 
Fukien. 

*  It  will  be  observed  that  the  demand  relates  to  any  Power,  and  not,  as 
originally  to  a  third  Power. 

*  For  translation  of  this  exchange  of  notes,  see  MacMurray,  No.  1915/8. 


JAPANESE  INTERESTS  IN  CHINA      413 

It  is  further  to  be  observed  that  in  the  famous  Fifth 
Group  of  the  Twenty-one  Demands,  which  group  has  been 
"  postponed  for  future  discussion,"  Japan  demanded  of 
China  (Art.  6)  that  **  if  China  needs  foreign  capital  to 
work  mines,  build  railways  and  construct  harbor  works 
(including  dockyards)  in  the  Province  of  Fukien,  Japan 
shall  first  be  consulted." 

Mr.  MacMurray  in  his  compilation  of  China  treaties 
points  out  ^  that  it  was  understood  that  in  the  correspond- 
ence regarding  rights  in  Fukien  the  Japanese  had  in  mind 
a  contract  that  was  said  to  have  been  concluded  between 
the  Chinese  Ministry  of  Marine  and  the  Bethlehem  Steel 
Company,  an  American  corporation,  on  March  9,  1914, 
for  the  establishment  of  a  naval  dockyard  at  Mamoi,  near 
Foochow,  a  translation  of  which  from  a  professed 
Chinese  original  had  been  published  in  the  Peking  Daily 
News.  Mr.  MacMurray  says :  "It  is  within  the  knowl- 
edge of  the  editor  (who  at  the  time  of  the  publication  of 
this  document  was  Secretary  of  the  American  Legation 
in  Peking)  that  this  alleged  contract  was  wholly  spurious, 
and  that  neither  the  Bethlehem  Steel  Company  nor  any 
other  American  firm  had  entered  into  any  agreement  with 
the  Chinese  Government  contemplating  the  establish- 
ment of  such  a  naval  base  at  Mamoi  or  elsewhere.  It 
can  only  be  supposed  that  the  Chinese  version  of  the 
document  in  question  was  fabricated  out  of  false  rumors 
and  surmises  as  to  the  offer  made  by  the  Bethlehem  Steel 
Company  in  October,  1911,  and  confirmed  by  its  vice- 
president,  Mr.  Johnson,  when  visting  Peking  in  the  winter 
of  1913-14,  to  open  a  credit  of  taels  25,000,000  in  favor 

*  In  a  note  to  No.  1915/18. 


414      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  the  Chinese  Governnient  if  and  when  desired  by  the 
Ministry  of  Marine  for  the  building  of  ships  and  ordnance 
by  the  company." 

Yangtze  Valley  Railroads  and  the  Hangyehping  Iron 
Works.  It  is  known  that  one  of  the  chief  reasons  why 
Japan  has  been  especially  anxious  to  obtain  influence  in 
China  is  in  order  that  it  may  have  access  to  and  control 
of  the  natural  resources  of  China,  and  especially  of  her 
coal  and  iron — resources  which  Japan  has  in  very  insuffi- 
cient quantities  within  her  own  borders,  and  for  which, 
with  her  developing  industrialization,  she  has  a  con- 
stantly increasing  need.  In  Manchuria  she  has  obtained 
control  of  important  mines,  especially  of  the  Fushun 
mines,  near  Mukden,  and  in  Shantung  she  also  has 
obtained  control  of  most  important  mining  rights  at 
Fangtze  and  Hungshan  and  other  places. 

It  had  been  supposed  that  England  had  obtained  a  posi- 
tion in  the  Yangtze  Valley  which  would  prevent,  at  the 
least,  the  granting  of  any  preferential  mining  or  railway 
or  industrial  rights  to  another  power,  but  in  the  Twenty- 
one  Demands  of  1915  Japan  demanded  special  mining 
and  railway  rights  in  this  region. 

In  Group  V  of  these  demands,  Japan  demanded  that 
China  agree  *  *  to  grant  to  Japan  the  right  of  constructing 
a  railway  connecting  Wuchang  with  Kiukiang  and  Nan- 
chang,  another  line  between  Nanchang  and  Hangchow, 
and  another  between  Nanchang  and  Chaochow.'* 

With  regard  to  these  demands  the  Chinese  Government 
has  the  following  to  say  in  its  ''  Official  History  of  the 
Sino- Japanese  Treaties  of  1915  ": 

The  demand  for  railway  concessions  in  the  Yangtze  Valley  con- 


JAPANESE  INTERESTS  IN  CHINA  415 

flicted.  with  the  Shanghai-Hangchow-Ningpo  Railway  Agreement 
of  March  6,  1908,  the  Nanking-Changsha  Railway  Agreement  of 
March  31,  1914,  and  the  engagement  of  August  24,  1914,  giving 
preference  to  British  firms  for  the  projected  line  from  Nanchang 
to  Chaochowfu.  For  this  reason  the  Chinese  Government  found 
ihemselves  unable  to  consider  the  demand,  though  the  Japanese 
Minister,  while  informed  of  China's  engagements  with  Great 
Britain,  repeatedly  pressed  for  its  acceptance. 

These  demanded  railway  concessions,  together  with  the 
other  Demands  of  Group  V  were  not,  as  is  known,  pushed 
to  final  issue  by  Japan  in  1915,  but  have  been  postponed 
' '  for  future  discussion. ' ' 

With  regard,  however,  to  another  very  important  in- 
terest in  the  Yangtze  Valley,  Japan  was  insistent  and 
successful.     This  related  to  the  Hanyehping  Iron  Works. 

This  Chinese  company  is  one  of  the  largest  iron  and 
coal  concerns  in  China,  and  is  situated  near  Hankow. 
The  corporation  controls  the  great  Tayeh  iron  mines, 
and  the  coal  deposits  of  Pinghsiang  which  supply  with 
fuel  the  Chinese  arsenal  of  Hanyang.  Through  ineffi- 
cient management  the  company  had  not  been  financially 
successful,  and,  before  the  war,  had  borrowed  consider- 
able sums  from  Japan. 

Demands  of  1915.  Now,  in  1915,  in  Group  III  of  the 
Twenty-One  Demands,  Japan  made  the  following  de- 
mands : 

The  Japanese  Government  and  the  Chinese  Government,  seeing 
that  Japanese  financiers  and  the  Hanyehping  Co.,  have  close  rela- 
tions with  each  other  at  present  and  desiring  that  the  common 
interests  of  the  two  nations  shall  be  advanced,  agree  to  the  follow- 
ing articles : — 

Article  1.  The  two  Contracting  Parties  mutually  agree  that 
when  the  opportune  moment  arrives  the  Hanyehping  Company 


416      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

shall  be  made  a  joint  concern  of  the  two  nations  and  they  further 
agree  that  without  the  previous  consent  of  Japan,  China  shall  not 
by  her  own  act  dispose  of  the  rights  and  property  of  whatsoever 
nature  of  the  said  Company  nor  cause  the  said  Company  to  dispose 
freely  of  the  same. 

Article  2.  The  Chinese  Government  agrees  that  all  mines  in 
the  neighborhood  of  those  owned  by  Hanyehping  Company  shall 
not  be  permitted,  without  the  consent  of  the  said  Company,  to  be 
Avorked  by  other  persons  outside  of  the  said  Company;  and  further 
agrees  that  if  it  is  desired  to  carry  out  any  undertaking  which,  it 
is  apprehended,  may  directly  or  indirectly  affect  the  interests  of  the 
said  Company,  the  consent  of  the  said  Company  shall  first  be 
obtained. 

With  reference  to  these  demands,  the  Chinese  Govern- 
ment, in  the  conferences  resulting  therefrom,  agreed  * '  to 
refrain  from  raising  objections  to  the  principle  of  co- 
operation in  the  Hanyehping  Company,  if  the  latter 
should  arrive  at  an  agreement  in  this  respect  with  the 
Japanese  capitalists  concerned.  With  reference  to  this 
question  it  was  pointed  out  to  the  Japanese  Minister  that, 
in  the  Provisional  Constitution  of  the  Republic  of  China, 
Chinese  subjects  are  guaranteed  the  right  to  protection 
of  their  property  and  freedom  to  engage  in  any  lawful 
occupation.  The  Government  were  precluded,  therefore, 
from  interfering  with  the  private  business  of  the  people, 
and  could  not  find  any  other  solution  than  the  one  thus 
agreed  to."* 

In  their  revised  form  Group  III  of  the  Japanese  De- 
mands read  as  follows : 

The  relations  between  Japan  and  the  Hanyehping  Company 
being  very  intimiate,  if  the  interested  party  of  the  said  Company 

*  China's  OflBcial  History  of  the  Sino-Japanese  Treaties. 


JAPANESE  INTERESTS  IN  CHINA      417 

comes  to  an  agreement  with  the  Japanese  capitalists  for  cooperation, 
the  Chinese  Government  shall  forthwith  give  its  consent  thereto. 
The  Chinese  Government  further  agrees  that,  without  the  consent 
of  the  Japanese  capitalists,  China  will  not  convert  the  company  into 
a  state  enterprise,  nor  confiscate  it,  nor  cause  it  to  borrow  and  use 
foreign  capital  other  than  Japanese. 

In  the  exchange  of  notes  ^  accompanying  the  treaties 
of  May  25,  1915,  resulting  from  Japan's  ultimatum  to 
China,  the  following  engagement  was  made  by  China : 

If  in  future  the  Hanyehping  Company  and  the  Japanese  capi- 
talists agree  upon  cooperation,  the  Chinese  Governm/ent,  in  view  of 
the  intimate  relations  subsisting  between  the  Japanese  capitalists 
and  the  said  company,  will  forthwith  give  its  permission.  The 
Chinese  Government  further  agrees  not  to  confiscate  the  said  com- 
pany, nor  without  the  consent  of  the  Japanese  capitalists  to  convert 
it  into  a  state  enterprise,  nor  cause  it  to  borrow  and  use  foreign 
capital  other  than  Japanese. 


'  For  translation  of  this  exchange  of  notes,  see  MacMurray,  No.  1915/8. 
27 


CHAPTER  XV 
Japan  ^s  Political  Ambitions  in  and  towaeds  China 


In  order  to  complete  our  account  of  Japan's  influence 
and  control  in  China,  or  at  least  her  officially  acknowl- 
edged ambitions  in  this  respect,  it  is  necessary  to  consider 
the  scope  of  the  famous  Fifth  Group  of  Demands  which 
she  presented  to  China  in  1915 — demands  which,  to  be 
sure,  were  not  then  granted  by  China,  but  which,  how- 
ever, are  still  pending  "  for  future  discussion." 

Group  V  of  the  Twenty-One  Demands.  These  demands 
in  their  original  form  were  as  follows : 

Article  1.  The  Chinise  Central  Government  shall  employ  influ- 
ential Japanese  advisers  in  pohtical,  financial  and  mihtary  affairs. 

Article  2.  Japanese'  hospitals,  churches  and  schools  in  the 
interior  of  China  shall  be  granted  the  right  of  owning  land. 

Article  3.  Inasmuch  as  the  Japanese  Government  and  the 
Chinese  Government  have  had  many  cases  of  dispute  between 
Japanese  and  Chinese  police  to  settle  cases  which  caused  no  little 
mlisunderstanding,  it  is  for  this  reason  necessary  that  the  police 
department  of  important  places  [in  China]  shall  be  jointly  admin- 
istered by  Japanese  and;  Chinese,  or  that  the  police  departments  of 
these  places  shall  employ  numerous  Japanese,  so  that  they  may  at 
the  same  time  help  to  plan  for  the  improvement  of  the  Chinese 
Police  Service. 

Article  4.  China  shall  purchase  from  Japan  a  fixed  amount  of 
munitions  of  war  (say  50^  or  more)  of  what  is  needed  by  the 
Chinese  Governmient,  or  that  there  shall  be  established  in  China  a 
Sino- Japanese  jointly  worked  arsenal.  Japanese  technical  experts 
are  to  be  employed  and  Japanese  material  to  be  purchased. 

418 


JAPAN'S  AMBITIONS  IN  CHINA  419 

Article  5.  China  agrees  to  grant  to  Japan  the  right  of  con- 
structing a  railway  connecting  Wuchang  with  Kiukiang  and  Nan- 
chang,  another  line  between  Nanchang  and  Hanchow,  and  another 
between  Nanchang  and  Chaochou. 

Article  6.  If  China  needs  foreign  capital  to  work  mines,  build 
railways  and  construct  hai^our- works  (including  Dockyards)  in 
the  Province  of  Fukien,  Japan  shall  be  first  consulted. 

Article  7.  China  agrees  that  Japanese  subjects  shall  have  the 
right  of  missionary  propaganda  in  China. 

When  one  considers  the  scope  of  these  demands  it  is 
not  surprising  that  the  Japanese  Government  should 
have  been  reluctant  to  have  it  known  by  the  other  Treaty 
Powers  that  they  were  being  pressed.  This  also  ex- 
plains the  official  issuance  by  Japan  of  what  purported 
to  be  a  list  of  the  Demands  which,  in  addition  to  other 
omissions  and  inaccuracies,  failed  to  make  mention  of 
the  fact  that  this  Fifth  Group  of  Demands  had  been 
presented.^ 

The  Japanese  Government  later  explained  this  omis- 
sion by  alleging  that  the  items  in  Group  V  had  been  pre- 
sented not  as  Demands  but  merely  as  Desiderata,  and, 
in  support  of  this  assertion  has  quoted  the  following 
paragraph  claimed  to  be  contained  in  the  instructions 
from  the  Foreign  Office  to  its  Minister  at  Peking: 

As  regards  the  proposals  contained  in  the  Fifth  Group,  they  are 
presented  as  the  wishes  of  the  Imperial  Government.  The  matters 
which  are  dealt  with  under  this  category  are  entirely  different  in 
character  from  those  which  are  included  in  the  first  four  groups. 
An  adjustment,  at  this  time,  of  these  matters,  some  of  which  have 

^  On  April  3,  the  Japanese  Premier,  Count  Okuma  made  the  public  state- 
ment that  Japan  had  not  asked  for  the  appointment  of  Japanese  advisers 
in  China,  and  that  "  in  Shantung  Japan  is  only  asking  for  what  China 
has  already  granted  to  Germany." 


420      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

been  pending  between  the  two  countries,  being  nevertheless  highly 
desirable  for  the  advancement  of  the  friendly  relations  between 
Japan  and  China  as  well  as  for  safeguarding  their  common  inter- 
ests, you  are  also  requested  to  exercise  your  best  efforts  to  have 
our  wishes  carried  out. 

Whatever  force  this  explanation  may  have  is  qualified 
by  the  fact  that  when  the  Twenty-One  Demands  were 
made  npon  China  there  was  no  indication  given  in  the 
text  or  the  accompanying  verbal  explanations  that  the 
demands  included  in  Group  V  were  different  in  kind  or 
less  imperatively  presented.  In  China's  "  Official  His- 
tory," it  is  stated: 

The  first  four  groups  were  each  introduced  by  a  preamble,  but 
there  was  no  preamble  or  explanation  to  the  fifth  of  the  five  groups. 
In  respect  of  the  character  of  the  demands  in  this  group,  however, 
DO  difference  was  indicated  in  the  document  between  them  and 
those  embodied  in  the  preceding  groups. 

With  regard  to  the  statement  of  the  Japanese  Govern- 
ment that  it  had  never  had  the  intention  of  forcing  China 
to  accept  the  Group  Five  Demands,  Mr.  Putnam  Weale 
says :  ' '  The  writer,  being  acquainted  from  first  to  last 
with  everything  that  took  place  in  Peking  from  the  18th 
January  to  the  filing  of  the  Japanese  ultimatum  of  the 
7th  May,  has  no  hesitation  in  stigmatizing  this  statement 
as  false."  ^ 

With  reference  to  the  demand  by  Japan  that  Japanese 
hospitals,  schools  and  temples  might  own  land  in  the 
interior  of  China  and  that  Japanese  subjects  should  have 
the  right  to  carry  on  religious  propaganda  in  China,  the 
Chinese  Government  in  its  **  Official  History,"  said  that 
this 

•  The  Fight  for  the  Republic,  p.  101. 


JAPAN'S  AMBITIONS  IN  CHINA  421 

would,  in  the  opinion  of  the  Chinese  Government  have  presented 
grave  obstacles  to  the  consolidation  of  the  friendly  feeling  sub- 
sisting between  the  two  peoples.  The  religions  of  the  two  countries 
are  identical  and,  therefore,  the  need  for  a  missionary  propaganda 
to  be  carried  on  in  China  by  Japanese  does  not  exist.  The  natural 
rivalry  between  Chinese  and  Japanese  followers  of  the  samfe  faith 
would  tend  to  increase  disputes  and  friction.  Whereas  Western 
missionaries  live  apart  from  the  Chinese  communities  among  which 
they  labor,  Japanese  monks  would  live  with  the  Chinese,  and  the 
similarity  of  their  physical  characteristics,  their  religious  garb,  and 
their  habits  of  life  would  render  it  impossible  to  distinguish  them 
for  purposes  of  affording  the  protection  which  the  Japanese  Gov- 
ernment would  require  should  be  extended  to  them  under  the  sys- 
tem of  extraterritorialty  now  obtaining  in  China.  Moreover  a 
general  apprehension  exists  among  the  Chinese  people  that  these 
peculiar  conditions  favoring  conspiracies  for  political  purposes 
might  be  taken  advantage  of  by  some  unscrupulous  Chinese. 

With  regard  to  the  demands  of  Group  V  concerning 
police  and  the  purchase  or  manufacture  of  arms,  Mr. 
Hombeck's  comment  deserves  quotation.    He  says: 

The  granting  of  the  first  of  these  would  connote  an  extensive 
abrogation  of  sovereign  rights,  would  intply  a  consciousness  on 
China's  part  of  inability  to  administer  her  own  affairs,  and  would 
inevitably  lead  to  acute  and  intolerable  friction.  The  granting  of 
the  second  would  involve  a  more  conspicuous  disregard  of  the  prin- 
ciple of  equal  opportunity  in  China's  markets  than  has  ever  in  a 
single  instance  been  shown.  It  would  necessitate  China's  making 
familiar  to  Japan  every  detail  of  her  military  preparation  and 
equipment,  thus  substantially  subordinating  herself  in  these  vitally 
important  matters  to  the  will  and  convenience  of  Japan.  The  two 
together  would,  in  the  course  of  a  few  years,  not  only  put  China 
absolutely  at  the  mercy  of  Japan  but  would  produce  conditions  to 
which  Japan  could  point  as  ample  justification  for  such  measures 
as  she  might  choose  to  take  for  the  ostensible  purpose  of  removing 
those  conditions.    If  China  assented  to  these  along  with  the  other 


422      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

demands  she  would  be  assigning  herself  as  a  protectorate,  imme- 
diately, to  Japan.' 

In  conclusion  of  this  subject  it  should  be  noted  that 
though  the  other  Powers  then  preoccupied  in  war  did  not 
deem  it  advisable,  at  least,  so  far  as  the  public  is  advised, 
to  protest  Japan's  Demands,  the  United  States,  on  May 
16,  1915,  felt  it  necessary  to  submit  to  the  Chinese  and 
Japanese  Governments  the  following  identic  note. 

In  view  of  the  circumstances  of  the  negotiations  which  have  taken 
place  and  which  are  now  pending  between  the  Government  of  China 
and  the  Government  of  Japan  and  of  the  agreements  which  have 
been  reached  as  a  result  thereof,  the  Government  of  the  United 
States  has  the  honour  to  notify  the  Government  of  the  Chinese 
Republic  that  it  cannot  recognize  any  agreement  or  undertaking 
which  has  been  entered  into  or  which  may  be  entered  into  between 
the  Governments  of  China  and  Japan  impairing  the  Treaty  Rights 
of  the  United  States  and  its  citizens  in  China,  the  political  or 
Territorial  integrity  of  the  Republic  of  China  or  the  international 
policy  relative  to  China  commonly  known  as  the  Open  Door  policy. 
An  identical  note  has  been  transmitted  to  the  Japanese  Government. 

Sino-Japanese  Military  Agreement  of  1918.  After 
China  entered  the  war  there  was  organized  a  so-called 
War  Participation  Board,  the  ostensible  purpose  of 
which  was  to  direct  the  military  operations  which  China 
might  undertake  as  a  belligerent  in  the  Great  War.  There 
can  be  no  question,  however,  that  its  chief  purpose  was 
to  serve  as  a  political  agency  of  the  northern  military 
party  in  the  contest  then  raging  between  the  northern 
provinces  represented  by  the  government  at  Peking,  and 
certain  of  the  southern  and  southwest  provinces  with 
their  headquarters  at  Canton. 

*  Contemporary  Politics  in  the  Far  East,  p.  318. 


JAPAN'S  AMBITIONS  IN  CHINA  423 

Early  in  the  year  1918  the  *'  Arms  Contract  '*  with 
Japan  had  been  entered  into  according  to  which  Japan 
was  to  supply  China,  that  is,  the  northern  military  party, 
with  a  large  amount — said  to  be  Yen  40,000,000  worth — 
of  arms  and  ammunition. 

Soon  after,  it  became  known  that  the  War  Participation 
Board  had  entered  into  an  agreement  with  the  Japanese 
Government,  the  text  of  which  was  kept  secret.  This 
news  created  so  much  excitement  in  China  and  specula- 
tion in  the  foreign  chancelleries  that,  on  May  30,  the 
parties  concerned  deemed  it  wise  to  make  public  the  fol- 
lowing notes  which  had  been  exchanged  the  preceding 
March.     These  notes  were  as  follows;* 

The  Chinese  Minister  at  Tokyo  writing  to  the  Japan- 
ese Minister  for  Foreign  Affairs,  under  date  of  March 
25,  1918,  said: 

I  have  the  honor  to  communicate  to  Your  Excellency  that  the 
Government  of  China  believing  that  in  the  present  situation 
cooperation  with  the  Government  of  Japan  on  the  lines  hereinafter 
indicated  is  highly  important  in  the  interest  of  both  countries, 
have  authorized  me  to  approach  your  government  with  a  view  to 
arranging  for  such  cooperation. 

1.  Having  regard  to  the  steady  penetration  of  hostile  influence 
into  Eussian  territory,  threatening  the  general  peace  and  security 
of  the  Far  East,  the  Government  of  China  and  the  Government  of 
Japan  shall  promptly  consider  in  common  the  measures  to  be  taken 
in  order  to  meet  the  exigencies  of  the  situation,  and  to  do  their 
share  in  the  Allied  cause  for  the  prosecution  of  the  present  war. 

2.  The  methods  and  conditions  of  such  cooperation  between  the 
Chinese  and  Japanese  armled  forces  in  the  joint  defensive  move- 
ments against  the  enemy  for  giving  effect  to  the  decision  which  may 

*  For  translations  of  these  exchanges  of  notes  and  of  the  Military  and 
Naval  Agreements,  see  MacMurray,  No.  1918/4. 


424      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

be  arrived  at  by  the  two  governments  in  common  accord  under  the 
preceding  clause,  shall  be  arranged  by  the  competent  authorities  of 
the  two  powers  who  will  from,  time  to  time  consult  each  other  fully 
and  freely  upon  all  questions  of  mutual  interest.  It  is  understood 
that  the  matters  thus  arranged  by  the  competent  authorities  shall 
be  confirmed  by  the  two  governments  and  shall  be  put  into  opera- 
tion at  such  timje  as  may  be  deemed  opportune. 

In  his  reply  Viscount  Motono  said  that  the  Japanese 
Government  **  fully  sharing  the  views  embodied  in  the 
foregoing  proposals,  will  be  happy  to  co-operate  with  the 
Chinese  Government  on  the  lines  above  indicated." 

On  the  same  day,  March  25,  the  Viscount  sent  also  the 
following  note  to  the  Chinese  Minister. 

With  reference  to  the  notes  exchanged  on  March  25,  between  the 
governments  of  Japan  and  of  China  on  the  subject  of  their  joint 
defensive  movements  against  the  enemy,  I  have  the  honor  to  pro- 
pose on  behalf  of  my  Government  that  the  period  within  which  the 
said  notes  are  to  remain  in  force  shall  be  determined  by  the  com- 
petent mihtary  and  naval  authorities  of  the  two  Powers.  At  the 
same  time  the  Imperial  Government  are  happy  to  declare  that  the 
Japanese  troops  stationed  within  Chinese  territory  for  the  purpose 
of  such  defensive  movements  against  the  enemy  shall  be  completely 
withdrawn  from  such  territory  upon  the  termination  of  the  war. 

Besides  publishing  these  notes  the  Japanese  Govern- 
ment issued  an  official  statement,  as  follows : 

Having  regard  for  the  steady  penetration  of  hostile  influence 
into  Eussian  territory,  jeopardizing  the  peace  and  welfare  of  the 
Far  East,  and  recognizing  the  imperative  necessity  of  adequate 
cooperation  between  Japan  and  China  to  meet  the  exigencies  of  the 
case,  the  Governments  of  the  two  countries,  after  frank  interchange 
of  views,  caused  the  annexed  notes  to  be  exchanged,  March  25, 
between  the  Minister  of  Foreign  Affairs  and  the  Chinese  Minister 
in  Tokyo. 

In  pursuance  of  the  purport  of  the  notes  the  Imperial  Govern- 


JAPAN'S  AMBITIONS  IN  CHINA  425 

ment  subsequently  sent  Commissioners  representing  the  Imperial 
Army  and  Navy  to  Peking,  where  they  held  conferences  with  the 
authorities  of  the  Chinese  army  and  navy.  The  negotiations  pro- 
gressing smoothly,  two  agreements  were  concluded,  one  relating 
to  the  arnty  being  signed  May  16,  and  the  other  relating  to  the 
navy,  May  19. 

These  agreements  only  embody  concrete  arrangements  as  to  the 
manner  and  conditions  under  which  the  armies  and  navies  of  the 
two  countries  are  to  cooperate  in  common  defence  against  the 
enemy,  on  the  basis  of  the  above  mentioned  notes  exchanged  on 
March  25.  The  details  of  the  arrangements  constituting  as  they 
do  a  military  secret,  cannot  be  made  public  but  they  contain  no 
provisions  other  than  those  pertaining  to  the  object  already  defined. 
Currency  has  been  given  to  various  rumors,  alleging  that  the 
agreements  contain  for  instance  such  stipulations  as  that  a  Chinese 
Expedition  is  to  be  under  Japanese  commiand,  that  Japan  may 
construct  ports  in  Chinese  territory  at  such  places  as  she  may 
choose,  that  Japan  will  assume  the  control  of  Chinese  railways, 
shipyards,  and  arsenals,  and  even  that  Japan  will  assume  the  control 
of  China's  finances,  will  organize  China's  police  system,  will  acquire 
the  right  of  freely  operating  Chinese  mines  producing  materials 
for  the  use  of  the  arsenals,  etc.  It  cannot  be  too  emphatically 
stated  that  these  and  similar  rumors  are  absolutely  unfounded. 

(Signed)  The  Ministry  of  Foreign  Affairs. 

The  military  agreement  itself,  was  signed  on  May  16, 
and  the  naval  agreement  on  May  19.  Their  texts  were 
not  made  public  until  March  14,  1919,  when  they  were 
published  simultaneously  in  Tokyo  and  Peking.  Briefly 
summarized,  these  Agreements  provided  as  follows: 

Each  country  pledged  itself  to  pay  due  respect  to  the 
prestige  and  interests  of  the  other  country,  and  both 
parties  were  to  be  on  an  equal  footing.  When  action 
should  become  necessary  under  the  agreements,  the  mili- 
tary and  civil  officials  and  peoples  of  both  countries  were 


426      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  adopt  a  friendly  attitude  towards  each  other  within 
the  military  areas.  Specifically,  the  Chinese  officials  were 
to  place  no  impediments  upon  the  movements  of  Japan- 
ese troops,  and  the  Japanese  troops  were  to  respect  the 
sovereignty  of  China  and  not  to  act  in  a  manner  contrary 
to  the  local  customs  or  to  cause  inconvenience  to  the 
Chinese  people  within  the  military  areas.  The  Japanese 
troops  were  to  be  withdrawn  as  soon  as  military  opera- 
tions should  cease.  If  it  should  become  necessary  to 
dispatch  troops  outside  Chinese  territory,  this  should  be 
jointly  undertaken.  In  order  to  facilitate  military  opera- 
tions the  two  countries  were  to  observe  the  following 
arrangements :  deputies  were  to  be  appointed  to  arrange 
for  cooperation ;  in  order  to  secure  rapid  transportation 
by  land  or  water,  both  sides  were  to  co-operate;  when 
necessary,  military  constructions,  such  as  railways,  tele- 
graph and  telephone  lines,  would  be  arranged  for,  which, 
however,  would  be  removed  at  the  conclusion  of  military 
operations;  the  two  countries  were  to  furnish  military 
supplies  and  materials  to  each  other  to  such  an  extent 
as  not  to  affect  the  supplying  of  ordinary  demands;  if 
military  experts  for  direct  military  operations  should  be 
needed  for  mutual  assistance,  the  one  country,  upon  being 
requested  so  to  do,  should  furnish  them  to  the  other; 
important  military  maps  and  reports  should  be  ex- 
changed, and  the  intelligence  services  of  the  two  coun- 
tries should  render  mutual  assistance;  all  secret  pass- 
words were  to  be  exchanged.  If  military  transportation 
should  necessitate  the  use  of  the  Chinese  Eastern  Rail- 
way, the  provisions  of  the  original  treaty  regarding  the 
management  and  protection  of  the  road  were  to  be 
respected.    Details  regarding  the  agreements  were  to  be 


JAPAN'S  AMBITIOXS  IX  CIIIXA  427 

decided  upon  by  delegates  appointed  by  the  military 
authorities  of  the  two  countries. 

The  foregoing  is  an  abstract  of  the  military  agreement. 
The  provisions  of  the  naval  agreement  were,  mutatis 
mutandis,  similar. 

By  a  supplementary  Military  Agreement,  signed  Sep- 
tember 6, 1918,  and  declared  to  be  explanatory  of  certain 
important  points  in  the  Military  Agreement,  it  was  pro- 
vided, inter  alia,  that  the  military  operations  to  be  con- 
ducted in  the  two  Siberian  provinces  of  Trans-Baikalia 
and  Amur  should  have  for  their  purpose  the  rendering 
of  aid  to  the  Czecho-Slovac  forces  and  to  drive  out  Ger- 
man and  Austrian  forces ;  and  that  the  operations  of  the 
Chinese  military  forces  in  those  provinces  should  be 
under  the  direction  of  Japanese  commanders. 

By  another  agreement  of  February  5, 1919,  it  was  pro- 
vided that — ' '  The  termination  of  the  state  of  war  against 
the  enemy  countries,  namely  Germany  and  Austria,  shall 
mean  the  time  when  both  the  Chinese  and  Japanese  Gov- 
ernments shall  have  approved  the  Peace  Treaty  concluded 
with  the  enemy  countries  by  the  European  Peace  Con- 
ference and  when  both  Chinese  and  Japanese  troops 
stationed  outside  Chinese  territory  shall  have  been  with- 
drawn simultaneously  with  the  troops  of  the  various 
Allied  countries  stationed  in  the  same  territories. ' '  This 
provision  was  declared'  to  relate  to  Article  9  of  the  Sino- 
Japanese  Joint  Military  Defence  Pact  and  to  the  provi- 
sion regarding  the  termination  of  the  state  of  war  em- 
bodied in  Section  2,  Article  11  of  that  Pact. 

In  connection  with  these  Sino-Japanese  military  agree- 
ments, may  also  be  mentioned  the  Arms  Agreement  said 
to  have  been  entered  into  between  the  two  countries  dur- 


428      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

ing  January,  1918,  according  to  which  China  was  to  pur- 
chase a  considerable  supply  of  arms  and  military  equip- 
ment from  Japan,  which  arms  were  not  to  be  used  for 
purposes  of  internal  strife.  By  this  agreement  Japan 
was  to  have  preferential  rights  in  supplying  arms  to 
China  in  the  future,  and  Japanese  officers  were  to  be 
engaged  as  instructors  for  the  training  of  Chinese 
troops.'^ 

At  the  time  of  the  present  writing  (1920)  these  mili- 
tary agreements  of  1918  appear  to  be  still  in  force.  Upon 
them  the  Japanese  Government  relied  in  some  measure 
to  justify  her  in  sending  to  the  Siberian  border  a  much 
larger  number  of  troops  than  it  had  been  understood  she 
was  to  send  under  the  agreement  with  the  United  States 
and  Entente  Powers  for  the  sending  of  troops  to  Eastern 
Siberia. 


•  This  agreement  was  reported  in  the  Japan  Advertiser  of  February  23, 
1919.     See  MacMurray,  note  to  No.  1918/4. 


CHAPTER   XVI 

Japan  's  * '  Special  Interests  ' '  in  China — The 
Lansing-Ishh  Agreement. 


In  order  to  complete  the  account  of  Japan's  status  in 
China  it  will  be  necessary  to  consider  with  some  degree 
of  particularity  her  claim  to  '*  Special  Interests  "  in 
that  country. 

The  Lansing-Ishii  Agreement.  Those  who  have  read 
the  pages  which  have  gone  before  will  remember  that  the 
term  *  *  Special  Interests  ' '  as  applied  to  conditions  in  the 
Far  East  had  found  employment  in  a  number  of  inter- 
national documents.  Thus,  for  example,  it  is  employed 
by  both  Great  Britain  and  Japan  as  descriptive  of  their 
interests  in  China  in  their  treaties  of  Alliance  of  1902, 
1905,  and  1911,  and  in  the  Franco- Japanese  Arrangement 
of  1907  it  is  declared  that  the  two  countries  have  a  **  spe- 
cial interest  to  have  the  order  and  pacific  state  of  things 
preserved  especially  in  the  regions  of  the  Chinese  Em- 
pire adjacent  to  the  territories  where  they  have  rights 
of  sovereignty,  protection,  or  occupation."  There  were, 
therefore,  precedents  for  the  recognition  which  the  United 
States  gave,  in  1917,  to  the  '^  special  interests  "  which 
Japan  possessed  in  China  by  virtue  of  her  territorial 
propinquity.  This  recognition  was  embodied  in  identic 
notes  exchanged  on  November  2,  1917,  between  Viscount 
Ishii  on  special  mission  from  his  Government  to  the 
United  States,  and  the  American  Secretary  of  State,  Mr. 
Lansing.  The  note  signed  by  Mr.  Lansing  read  as 
follows : 

429 


430      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

November  2,  1917. 
Excellency : — 

I  have  the  honor  to  communicate  herein  my  understanding  of 
the  agreemient  reached  by  us  in  our  recent  conversations  touching 
the  questions  of  mutual  interest  to  our  Governments  relating  to  the 
Republic  of  China. 

In  order  to  silence  mischievous  reports  that  have  from  time  to 
timie  been  circulated,  it  is  believed  by  us  that  a  public  announce- 
ment once  more  of  the  desires  and  intentions  shared  by  our  two 
Governments  with  regard  to  China  is  advisable. 

The  Governments  of  the  United  States  and  Japan  recognize  that 
territorial  propinquity  creates  special  relations  between  countries, 
and,  consequently,  the  Government  of  the  United  States  recognizes 
that  Japan  has  special  interests  in  China,  particularly  in  the  part 
To  which  her  possessions  are  contiguous. 

The  territorial  sovereignty  of  China,  nevertheless,  remains  un- 
impaired and  the  Government  of  the  United  States  has  every 
confidence  in  the  repeated  assurances  of  the  Imperial  Japanese 
Government  that  while  geographical  position  gives  Japan  such 
special  interests  they  have  no  desire  to  discriminate  against  the 
trade  of  other  nations  or  to  disregard  the  commiercial  rights  here- 
tofore granted  by  China  in  treaties  with  other  powers. 

The  Governments  of  the  United  States  and  Japan  deny  that 
they  have  any  purpose  to  infringe  in  any  way  the  independence  or 
territorial  integrity  of  China  and  they  declare,  furthermore,  that 
they  always  adhere  to  the  principle  of  the  so-called  "Open  Door  " 
or  equal  opportunity  for  commerce  and  industry  in  China. 

Moreover,  they  mutually  declare  that  they  are  opposed  to  the 
acquisition  by  any  Government  of  any  special  rights  or  privileges 
that  would  affect  the  independence  or  territorial  integrity  of  China 
or  that  would  deny  to  the  subjects  or  citizens  of  any  country  the 
full  enjoyment  of  equal  opportunity  in  the  commerce  and  industry 
of  China. 

I  shall  be  glad  to  have  Your  Excellency  confirm  this  under- 
standing of  the  agreement  reached  by  us. 

Accept,  Excellency,  the  renewed  assurance  of  my  highest  con- 
sideration. 

Robert  Lansing. 


JAPAN'S  "  SPECIAL  INTEEESTS  "  431 

China's  Declaration  with  Regard  to  the  Lansing-Ishii 
Agreement.  A  feature  of  the  Lansing-Ishii  Agreement 
which  deserves  mention  is  the  fact  that,  though  relating 
to  China,  it  was  negotiated  and  published  without  the 
Chinese  Foreign  Office  being  consulted  or  informed.  It 
was,  therefore,  not  surprising  that  the  Chinese  Govern- 
ment should  have  felt  that  it  had  been  humiliated,  and 
that  it  should  be  apprehensive  of  the  meaning  and  pos- 
sible effect  of  this  recognition  by  America  of  the  special 
interests  within  its  borders  of  the  one  nation  which  above 
all  others  it  fears  as  having  designs  upon  its  sovereignty 
and  administrative  integrity.  Accentuating  this  feeling 
was  the  fact  that  the  agreement  was  first  notified  to  them 
on  November  4,  through  the  Japanese  Legation  at  Pek- 
ing.^    The   Chinese  Government,   therefore,   was   quite 

'  This  was  in  violation  of  the  understanding  with  the  United  States, 
which  was  to  the  eflFect  that  the  notes  should  be  given  publicity  on  Novem- 
ber 7.  Even  the  American  Legation  at  Peking  had  no  notice  of  the  agree- 
ment until  a  copy  of  it  was  handed  to  Minister  Reinsch  on  November  4, 
by  Baron  Hayashi,  the  Japanese  Minister  at  Peking.  Mr.  Millard  is  quite 
justified  in  the  statement  that  "  There  is  no  doubt  that  this  procedure  was 
deliberately  calculated  to  impress  the  Chinese  Government  that  the  United 
States  Government  had  to  some  extent  conceded  Japan's  paramountcy  in 
China,  and  therefore  it  was  Japan's  prerogative  officially  to  notify  both 
the  Chinese  Foreign  Office  and  the  American  Legation  of  this  important 
matter." 

Mr.  Millard  also  makes  the  following  interesting  observation :  "  A  very 
significant  point  in  connection  with  the  communication  of  the  agreement 
to  the  Wai-Chiao-pu  (Chinese  Foreign  Office)  by  the  Japanese  Minister  at 
Peking  is  that  both  the  Japanese  and  Chinese  texts  used  certain  characters 
( li-i )  to  translate  the  '  special  interests '  of  Japan  that  are  recognized 
l)y  the  United  States  in  the  instrument.  In  the  translation  submitted  to 
the  Wai-Chiao-pu  later  by  the  American  Legation  as  the  official  text  recog- 
nized by  the  American  Government,  different  characters  (Kuan-hsi)  were 
used  to  describe  the  '  special  interests '  that  were  recognized.  The  char- 
acters mean  almost  the  same  thing,  yet  with  a  distinction.  As  translated 
by  the  Japanese  version  '  special   interests  '  indicate  vested  interests   or 


432      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

within  its  right  when,  on  November  12, 1917,  it  issued  the 
following  declaration :  ^ 

The  Government  of  the  United  States  and  the  Government  of 
China  have  recently,  in  order  to  silence  maschievous  reports,  effected 
an  exchange  of  notes  at  Washington  concerning  their  desires  and 
intentions  with  regard  to  China.  Copies  of  the  said  notes  have 
been  communicated  to  the  Chinese  Government  by  the  Japanese 
Minister  at  Peking ;  and  the  Chinese  Government,  in  order  to  avoid 
misunderstanding,  hastens  to  make  the  following  declaration  so  as 
to  make  known  the  views  of  the  government. 

The  principle  adopted  by  the  Chinese  Government  towards  the 
friendly  nations  has  always  been  one  of  justice  and  equality;  and 
consequently  the  rights  enjoyed  by  the  friendly  nations  derived 
from  the  treaties  have  been  consistently  respected,  and  so,  even 
with  the  special  relations  between  countries  created  by  the  fact  of 
territorial  contiguity,  it  is  only  in  so  far  as  they  have  already  been 
provided  for  in  her  existing  treaties.  Hereafter  the  Chinese  Gov- 
ernment will  still  adhere  to  the  principle  hitherto  adopted,  and 
hereby  it  is  again  declared  that  the  Chinese  Government  will  not 
allow  herself  to  be  bound  by  any  agreement  entered  into  by  other 
nations. 

proprietorship,  something  tangible.  In  the  American  version,  '  special 
interests '  mean  merely  a  close  or  strong  general  interest  in  the  welfare 
of  China,  not  a  particular  or  vested  proprietary  or  paramount  interest. 
.  .  .  After  the  American  interpretation  had  been  given  out,  and  published 
in  the  Chinese  press,  the  Japanese  Legation  made  an  effort  to  induce  the 
American  Legation  to  accept  the  Japanese  translation  and  amend  the 
American  version,  but  that  was  declined." 

Mr.  J.  C.  Ferguson,  in  his  testimony  before  the  Senate  Committee,  did 
not  fully  agree,  upon  the  foregoing  point,  with  Mr.  Millard.  He  does  say 
however,  that  the  Japanese  translation  into  Chinese  of  the  Lansing-Ishii 
notes  did  not  agree  with  the  translation  into  Chinese  made  by  the  Chinese 
or  by  the  Americans.  As  to  the  phrase  "  Special  Interests  "  he  made  the 
statement  that  in  the  Japanese  version  it  "was  translated  in  such  a  way 
that  it  became  a  recognition  on  the  part  of  the  United  States  that  Japan 
has  special  influence  in  China." 

*  Declaration,  not  protest.  Secretary  Lansing  when  asked  the  distinction 
between  the  two  said :  "  There  is  a  very  decided  difference.  A  protest  calls 
for  an  answer,  and  a  declaration  does  not." 


JAPAN'S  "  SPECIAL  INTEEESTS  "  433 

"When  asked  why  the  United  States  had  not  conferred 
with  the  Chinese  representatives  while  discussing  and 
preparing  the  notes,  Secretary  Lansing,  in  his  evidence 
before  the  Senate  Committee,  said  that  this  had  not  been 
deemed  necessary  since  * '  It  was  a  mere  matter  of  declar- 
ation of  a  mutual  policy  between  Japan  and  the  United 
States  in  regard  to  their  attitude  towards  China.  It  did 
not  directly  affect  any  rights  of  China,  except  that  the 
two  countries  agreed  that  they  would  keep  their  hands 
off/' 

Comment  upon  the  Agreement  In  an  explanatory 
statement  which  the  American  Secretary  gave  to  the 
press  at  the  time  of  the  publication  of  his  agreement  with 
Viscount  Ishii,  it  was  declared  that  there  had  been  grow- 
ing up  between  the  Japanese  and  American  peoples  a 
suspicion  of  each  other's  motives  in  the  Far  East; — ^that 
to  legitimate  commercial  and  industrial  enterprises  were 
ascribed  political  purposes ;  that  this  unfortunate  feeling 
had  been  adroitly  stimulated  by  German  propaganda,  and 
that,  therefore,  it  was  desirable  that  there  should  be  a 
frank  statement  upon  the  part  of  the  two  governments 
as  to  their  policies  in  and  towards  China.  **  By  openly 
proclaiming  that  the  policy  of  Japan  is  not  one  of  aggres- 
sion, and  by  declaring  that  there  is  no  intention  to  take 
advantage  commercially  or  industrially  of  the  special 
relation  to  China  created  by  geographical  position,  the 
representatives  of  Japan  have  cleared  the  diplomatic 
atmosphere  of  the  suspicions  which  had  been  so  carefully 
spread  by  our  enemies  and  by  misguided  or  over-zealous 
people  in  both  countries."  The  statements  in  the  notes, 
Mr.  Lansing  declared,  "  not  only  contain  a  reaffirmation 

28 


434      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

of  the  *  Open  Door '  principle,  but  introduce  a  principle 
of  non-interference  with  the  sovereignty  and  territorial 
integrity  of  China.'* 

Mr.  Lansing  further  declared  that  while  it  was  not 
expedient  to  make  public  all  the  communications  which 
had  preceded  the  signing  of  the  agreement,  yet  it  might 
be  said  that  assurances  had  been  given  that  the  Japanese 
Government  was  anxious  to  do  its  part  in  the  suppres- 
sion of  Prussian  militarism,  and  that  complete  and  satis- 
factory understandings  had  been  reached  with  regard  to 
the  matter  of  naval  co-operation  in  the  Pacific. 

What  especially  is  to  be  noted  in  this  contemporaneous 
explanation  which  Mr.  Lansing  thus  made  was  the  stress 
that  was  laid  upon  the  promise  which  Japan  made  to 
respect  the  sovereignty  and  territorial  integrity  of  China 
and  to  observe  the  principle  of  the  Open  Door,  and  the 
absence  of  any  direct  reference  to  the  fact  that  the  United 
States,  upon  its  part  recognized  that  Japan  had  *  *  special 
interests  "  in  China. 

Notwithstanding  the  explanation  in  the  agreement 
itself  and  in  the  accompanying  explanation  of  Secretary 
Lansing,  there  has  been  not  a  little  speculation  as  to  why 
it  should  have  been  deemed  necessary  or  expedient  at  the 
time  to  sign  and  make  public  the  agreement.  Also  there 
had  been  considerable  dispute  as  to  just  what  meaning 
the  two  parties  to  it  intended  should  be  ascribed  to  the 
term  **  Special  Interests."  This  last  is  a  matter  of  such 
considerable  importance  that  we  shall  dwell  upon  it  at 
some  length. 

It  would  seem  that  there  must  have  been  certain  consid- 
erations moving  the  parties  to  it  that  have  not  been  made 
public.     The  aflfirmation  of  an  intention  to  respect  the 


JAPAN'S  "  SPECIAL  INTERESTS  "  435 

territorial  sovereignty  of  China  unimpaired,  and  to 
uphold  the  open  door  doctrine  in  China  was,  of  course, 
nothing  more  than  the  reiteration  of  a  promise  and  an 
intention  that  had  already  been  repeatedly  declared. 
Unless,  then,  we  grant  that  the  parties  had  reason  for 
thinking  that  these  promises  were  in  considerable  danger 
of  being  broken  by  Japan  or  by  the  United  States — a 
danger  which  this  agreement  sought  to  avoid — ^the  gist  of 
the  understanding  lies  in  the  formal  recognition  by  the 
United  States  that  Japan,  by  reason  of  her  '*  territorial 
propinquity  ' '  had '  *  special  interests  ' '  in  China,  particu- 
larly in  that  part  to  which  her  possessions  were  contigu- 
ous. It  has  already  been  observed  that  the  term  * '  special 
interests  ' '  was  by  no  means  a  new  one.  In  no  case,  how- 
ever, had  the  term  been  defined,  nor,  so  far  as  the  writer 
is  aware,  has  any  attempt  been  made  to  give  it  an  officially 
precise,  or  even  fairly  definite,  meaning.  In  the  Lansing- 
Ishii  agreement  it  is  not  defined  except  negatively,  and 
by  implication,  to  the  extent  of  holding  that  it  does  not 
connote  rights  that  are  in  violation  of  China's  territorial 
sovereignty  and  integrity  or  the  open  door  principle. 

It  has  not  been  suggested  from  any  quarter  that  the 
Lansing-Ishii  agreement  was  intended  to  operate  as  an 
abrogation  or  modification  of  the  Eoot-Takahira  agree- 
ment by  which  the  United  States  and  Japan  recognized 
the  status  quo  *  *  in  the  region  of  the  Pacific  Ocean. ' '  If, 
then,  we  boil  the  matter  down  until  a  tangible  residuum 
is  reached,  the  essential  fact  is  that  the  United  States, 
definitely  recognized  that  Japan  had  * '  special  interests  '  * 
in  China,  ' '  particularly  in  the  part  to  which  her  posses- 
sions are  contiguous,"  and  that  the  matter  of  Japan's 
special  interests  was  left  undefined. 


436      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  raises  the  question  why  the  United  States  should 
have  felt  itself  called  upon  at  the  time  to  make  this  recog- 
nition— especially  in  view  of  the  fact  that  America,  above 
all  the  other  Treaty  Powers,  had  previously  been  pecu- 
liarly insistent  upon  resisting  so  far  as  possible  any 
developments  in  the  Far  East  tending  to  infringe  the 
sovereignty  and  administrative  integrity  of  China  or  to 
qualify  the  Open  Door  principle.  Only  a  few  years 
previously  its  government  had  formally  withdrawn  its 
support  from  its  bankers  who  were  members  of  the  Six 
Power  Consortium  because  the  loans  it  was  negotiating 
appeared  to  carry  with  them  an  interference  with  China's 
autonomous  administrative  action. 

In  the  statement  given  out  by  Secretary  Lansing  at 
the  time  of  the  publication  of  the  Lansing-Ishii  agree- 
ment it  is  said  that  the  High  Parties  to  it  were  moved  by 
a  desire  to  put  a  stop  to  a  growing  suspicion  between  the 
people  as  to  the  motives  inducing  the  actions  of  each 
other  in  the  Far  East — a  suspicion  in  part  at  least 
fostered  and  encouraged  by  German  propaganda — and 
there  is  also  the  statement  that  a  satisfactory  under- 
standing had  been  reached  as  to  the  naval  co-operation 
of  Japan  in  aid  of  the  Allies  in  the  war.  But  neither 
one  of  these  reasons,  nor  both  together,  are  adequate  to 
explain  the  making  of  the  agreement.  For,  in  the  first 
place,  the  terms  of  the  agreement  are  so  indefinite  as  to 
lay  the  basis  for,  rather  than  to  prevent,  future  suspicion 
and  discord ;  and,  in  the  second  place,  it  is  known  that  the 
promises  which  Japan  was  induced  to  make  in  the  way  of 
supplying  merchant  ships  were  founded  upon  fully  pro- 
portionate promises  of  the  United  States  with  regard  to 
the  supplying  of  steel  to  Japan.   And,  as  regards  Japan's 


JAPAN'S  "  SPECIAL  INTERESTS  "  437 

naval  co-operation,  it  is  to  be  presumed  that  this  was  a 
matter  already  covered  by  understandings  between 
Japan  and  her  western  allies.  Thus  a  certain  amount  of 
mystery  still  surrounds  the  Lansing-Ishii  agreement. 

Secretary  Lansing's  Testimony  before  the  Committee 
on  Foreign  Relations  of  the  United  States  Senate.  Con- 
siderable light  upon  the  meaning  of  the  Lansing-Ishii 
agreement,  and  upon  certain  circumstances  attending  its 
framing,  has  recently  been  shown  by  the  evidence  given 
by  Secretary  Lansing,  in  August,  1918,  before  the  Com- 
mittee on  Foreign  Relations  of  the  United  States  Senate.* 
The  testimony  is  too  long  to  be  quoted  entirely,  but 
certain  of  the  Secretary's  statements  may  be  reproduced 
or  summarized. 

When  asked  what  construction  should  be  placed  upon 
the  term  '*  special  interests,"  inview  of  Japan's  Twenty- 
one-Demands,  Mr.  Lansing  replied:  **  Only  the  special 
interest  that  comes  from  being  contiguous  to  another 
country  whose  peace  and  prosperity  were  involved." 
Asked  if  these  interests  differed  from  those  which  the 
United  States  had  in  Canada  or  in  Mexico,  he  replied 
**  No."  Asked  if  it  was  understood  by  the  State  Depart- 
ment that  the  agreement  operated  in  any  way  to  endorse 

'  Hearings  before  the  Committee  on  Foreign  Relations  of  the  United 
States  Senate,  "  The  Treaty  of  Peace  with  Germany,"  pp.  139-253.  Wash- 
ington, Government  Printing  Ofl5ce,  1919. 

With  regard  to  all  of  Secretary  Lansing's  testimony  before  the  Senate 
Committee  it  is  to  be  noted  that  he  was  not  relying  upon  his  unaided 
testimony  as  to  what  conversations  had  taken  place  between  him  and 
Viscount  Ishii.  No  stenographer  had  been  present  while  they  were  being 
held  but  upon  each  occasion,  immediately  after  the  departure  of  Viscount 
Ishii,  Mr.  Lansing  dictated  to  his  own  private  secretary  what  had  been 
said,  and  those  memoranda  he  still  had. 


438      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Japan's  Twenty-one  Demands,  the  Secretary  replied, 
**  Absolutely  not.  We  were  opposed  to  the  Twenty-one 
Demands."  Also  it  was  declared  that  the  agreement 
could  not  be  held  to  approve  anything  which  had  since 
developed  under  the  secret  agreements  of  1917  entered 
into  by  Japan  with  Great  Britain,  Russia,  France  and 
Italy.  The  Secretary  said  that  Viscount  Ishii  had  given 
him  no  intimation  that  such  agreements  were  in  existence, 
but  that,  had  he  known  of  them,  he  would  not  have  been 
deterred  from  signing  the  agreement.  Regarding  this 
statement  the  observation  may  be  made  that,  giving  to 
the  agreement  the  construction  which  the  Secretary  has 
given  to  it,  there  would,  in  fact,  appear  no  reason  why, 
upon  the  part  of  the  United  States,  it  should  not  have 
been  signed. 

The  principal  reason,  so  far  as  the  United  States  was 
concerned,  said  the  Secretary,  why  the  agreement  was 
entered  into  was  to  get  a  renewed  declaration  upon  the 
part  of  Japan  in  favor  of  the  open  door  in  China.  Mr. 
Lansing  said : 

I  suggested  to  Viscount  Ishii  that  it  would  be  well  for  the  two 
governments  to  reaflEirni  the  Open  Door  policy,  on  the  ground  that 
reports  were  being  spread  as  to  the  purpose  of  Japan  to  take 
advantage  of  the  situation  created  by  the  war  to  extend  her  influ- 
ence over  China — political  influence.  Ishii  replied  to  me  that  he 
would  like  to  consider  the  matter,  but  that,  of  course,  he  felt  that 
Japan  had  a  special  interest  in  China,  and  that  that  should  be 
mentioned  in  any  agreement  that  we  had;  and  I  replied  to  him 
that  we,  of  course,  recognized  that  Japan,  on  account  of  her  geo- 
graphical position,  had  a  peculiar  interest  in  China,  but  that  it  was 
not  political  in  nature,  and  that  the  danger  of  a  statement  of 
special  interest  was  that  it  might  be  so  construed,  and  therefore  I 
objected  to  making  such  a  statement. 

At  another  interview  we  discussed  the  phrase  "  special  interests," 


JAPAN'S  "  SPECIAL  INTEEESTS  "  439 

which  the  Japanese  Government  had  been  very  insistent  upon,  and 
which,  with  the  explanation  which  I  have  made,  I  was  not  very 
strongly  opposed  to,  thinking  that  the  affirmation  of  the  open  door 
policy  was  the  most  essential  thing  that  we  could  have  at  this  time ; 
and  we  discussed  the  phrase  which  appeared  in  the  draft  note 
"special  interest,"  and  I  told  him  then  that  if  it  meant  "para- 
mount interest"  I  could  not  discuss  it  further;  but  if  he  meant 
special  interest  based  upon  geographical  position  I  would  consider 
the  insertion  of  it  in  the  note.  Then  it  was,  during  that  same 
interview  that  we  mentioned  "  paramount  interest "  and  he  made  a 
reference  to  the  Monroe  Doctrine,  and  rather  a  suggestion  that 
there  should  be  a  Monroe  Doctrine  for  the  Far  East.  And  I  told 
him  that  there  appeared  to  be  a  misconception  as  to  the  underlying 
principle  of  the  Monroe  Doctrine;  that  it  was  not  an  assertion  of 
primary  or  paramount  interest  by  the  United  States  in  its  relation 
to  the  other  American  republics;  that  its  purpose  was  to  prevent 
foreign  Powers  from  interfering  with  the  separate  rights  of  any 
nation  in  this  hemisphere,  and  that  the  whole  aim  was  to  preserve 
to  each  Eepublic  the  power  of  self -development.  I  said  further 
that  so  far  as  aiding  in  this  development  the  United  States  claimed 
no  special  privileges  over  other  countries.  ...  I  told  Viscount 
Ishii  that  I  felt  that  the  same  principle  should  be  applied  to  China, 
and  that  no  special  privileges  and  certainly  no  paramount  interest 
in  that  country  should  be  claimed  by  any  foreign  Power.  While 
the  phrasing  of  the  notes  to  be  exchanged  was  further  considered, 
fhe  meaning  of  "  special  interest "  was  not  again  discussed. 

Upon  being  asked  whether  Visconnt  Ishii  had  accepted 
his,  Mr.  Lansing's,  view  as  to  the  meaning  of  the 
phrase  *'  special  interest,"  Mr.  Lansing  replied  that  the 
Viscount  had  maintained  silence.  Questioned  later  as  to 
whether  Viscount  Ishii  had  at  any  time  indicated  that  it 
meant  paramountcy  or  interest  different  from  that  of  any 
other  nation,  other  than  from  Japan's  propinquity  to 
China,  Mr.  Lansing  replied :  *  *  My  only  recollection  is 
that  he  wished  to  have  inserted  the  words  *  special  inter- 


440      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

ests  and  influence,*  and  I  objected  seriously  to  the  words 

*  and  influence  '  and  they  were  stricken  out. ' ' 

Elsewhere  in  his  testimony  Mr.  Lansing  said  that  the 
proposition  to  insert  in  the  notes  the  provision  regarding 

*  *  special  interests  ' '  came  from  Viscount  Ishii : 

Senator  Borah.  You  suggested  to  iiim  that  if  that  meant  politi- 
cal control  or  paramount  control,  you  did  not  care  to  discuss  it  ? 

Secretary  Lansing.    Yes. 

Senator  Borah.  What  did  he  say  in  reply  to  that,  which  would 
indicate  that  he  waived  that  construction  upon  your  part? 

Secretary  Lansing.    He  continued  the  discussion. 

Senator  Borah.    And  continued  it  along  what  line  ? 

Secretary  Lansing.  Well,  only  along  the  line  that  he  inserted 
it  in  his  counter-draft  of  a  note  and  urged  that  it  be  included. 
But  he  understood  exactly  what  I  interpreted  the  words  "  special 
interest "  to  mean. 

Senator  Borah.  And  you  understood  what  he  interpreted  them 
to  mean  ? 

Secretary  Lansing.    No,  I  did  not. 

Senator  Borah,  He  said  that  his  idea  was  that  Japan  had  spe- 
cial interests  in  China  which  ought  to  be  recognized,  and  by  those 
special  interests  he  meant  param^ount  control  ? 

Secretary  Lansing.    Yes ;  and  I  told  him  I  would  not  consider  it. 

Senator  Borah.  Did  he  say,  "Very  well,  I  adopt  that  con- 
struction of  it,"  or  anything  of  that  kind  ? 

Secretary  Lansing.  No,  but  he  continued  to  introduce  the  words 
"  special  interest,"  but  he  knew  that  if  he  did  not  take  my  meaning 
I  could  not  continue  the  discussion. 

Senator  Brandegee.  Has  the  so-called  Lansing-Ishii  agreement 
any  binding  force  on  this  country  ? 

Secretary  Lansing.    No. 

Senator  Brandegee.  It  is  simply  a  declaration  of  your  policy, 
or  the  pohcy  of  this  Government,  as  long  as  the  President  or  the 
State  Department  want  to  continue  that  policy,  I  suppose? 

Secretary  Lansing.  Exactly,  in  the  same  way  that  the  Eoot- 
Takahira  agreement  is. 


JAPAN'S  "  SPECIAL  INTEEESTS  "  441 

In  another  part  of  Ms  testimony  Mr.  Lansing  said  that 
the  *  *  special  interest ' '  which  he  recognized  Japan  to 
have  in  China  related  to  the  whole  of  China. 

Conclusions  as  to  the  Scope  of  Japan's  Special  Interests 
in  China.  It  has  earlier  been  pointed  out  that  it  has  not 
been  easy  to  harmonize  the  existence  of  **  spheres  of 
interest, '*  claimed  in  China  by  certain  of  the  Treaty 
Powers,  with  the  general  application  to  that  country  of 
the  principle  of  the  ''Open  Door."  The  matter  has 
become  still  more  difficult  by  the  claim  upon  the  part  of 
Japan  to  * '  special  interests  ' '  in  China. 

It  seems  pretty  clear  that  Japan  and  the  other  Treaty 
Powers,  and  especially  the  United  States,  are  not  in  full 
agreement  as  to  the  implications  of  the  term  *'  special 
interests."  At  least  this  is  so  if  we  take  Japan's  inter- 
pretation of  the  phrase  as  evidenced  by  her  acts  and 
certain  of  her  efforts  and  not  merely  as  declared  in  her 
formal  and  official  announcements.  As  regards  the 
American  position,  which  may  be  assumed  to  be  that  of 
the  other  Treaty  Powers  with  the  exception  of  Japan,  it 
would  appear  to  be  as  follows : 

The  fact  that  Japan  is  a  comparatively  near  neighbor 
of  China,  and  with  a  coterminous  border  along  the 
northern  boundary  of  Korea,  necessarily  gives  to  that 
country  a  more  particular  concern  in  what  happens  in 
or  to  China  than  is  the  case  with  regard  to  the  other 
Treaty  Powers.  This  is  true  not  only  with  reference  to 
matters  commercial,  financial  and  industrial,  but  with 
regard  to  matters  political.  Commercially  their  trade 
with  the  Chinese  is  a  very  important  matter  to  the  Japa- 
nese people.    Also  it  is  of  prime  importance  that  Japan 


442      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

should  not  find  herself  so  placed  as  not  to  be  able  to 
obtain  raw  materials  from  China — iron,  coal  and  food — 
upon  terms  fully  as  favorable  as  those  enjoyed  by  any 
other  country.  Even  more  than  this,  it  is  of  almost  vital 
concern  to  her  that  China  should  not  pursue  a  general 
policy  of  discouraging  foreign  export  and  import  trade. 
Politically,  Japan  has  a  particular  concern  in  China  for 
the  reason  that  should  certain  foreign  Powers  obtain  a 
dominant  or  strong  control  in  China,  her  own  national 
safety  might  be  endangered.  In  other  words,  Japan  has, 
beyond  question,  the  same  justification  for  declaring  and 
supporting  an  Asiatic  '*  Monroe  Doctrine"  that  asserts 
that  the  development  in  China  of  dominant  or  strong 
political  control  by  any  foreign  Power  would  be  an  act 
unfriendly  to  herself,  that  the  United  States  has  had  in 
maintaining  a  similar  doctrine  with  regard  to  the  Western 
Hemisphere.  Also,  for  the  same  reason,  Japan  would 
have  the  same  concern  regarding  the  development  of 
turbulent  conditions  in  China,  leading  to  lawless  and 
unpunished  acts  against  her  nationals  or  to  forays  from 
China  across  her  borders  or  to  her  shores,  that  the  United 
States  has  had  with  regard  to  conditions  in  Mexico  or 
which  she  might  have  if  similar  conditions  should  develop 
in  Canada  along  her  northern  boundary.  But,  of  course, 
such  an  Asiatic  Monroe  Doctrine  carries  with  it  no  impli- 
cation of  a  right  upon  her  part  to  claim  in  China  economic 
preferences  or  rights  of  political  jurisdiction  other  than 
those  granted  to  the  other  Powers.  And  it  does  not  need 
to  be  said  that  no  claim  of  national  interest  would  furnish 
ethical  justification  to  Japan  to  subordinate  Chinese 
national  interests,  economic  or  political,  to  her  own.  This 
Prussian  doctrine,  the  world  has  agreed  to  be  false  and 


JAPAN'S  "  SPECIAL  INTERESTS  "  443 

pernicious.  The  special  advantages  which  Japan  posesses 
with  regard  to  her  dealings  with  China  due  to  the  facts 
that  she  is  near  to  that  country;  that  her  language  is 
sufficiently  similar  to  make  it  easier  for  her  people  to  use 
the  Chinese  language  than  other  people  can ;  that,  as  the 
Japanese  have  claimed,  they  are  an  Oriental  people  with 
a  similar  civilization  and  therefore  better  able  to  under- 
stand and  appreciate  the  interests  and  feelings  of  the 
Chinese  than  are  Westerners — of  these  circumstantial 
advantages  the  Japanese  are  of  course  entitled  to  make 
all  possible  use.  These  proper  advantages  the  American 
Minister  at  Peking  referred  to  on  November  8,  1917,  in 
his  statement  to  the  Chinese  Government  explaining  the 
Lansing-Ishii  agreement.  **  Japanese  commercial  and 
industrial  enterprises  in  China,"  he  said,  "  manifestly 
have,  on  account  of  the  geographical  relation  of  the  two 
countries,  a  certain  advantage  over  similar  enterprises 
on  the  part  of  the  citizens  or  subjects  of  any  other 
country. ' '  ^* 

As  has  been  seen,  America  has  been  the  chief  spokes- 
man in  voicing  the  open  door  policy  and  the  principle  of 
the  maintenance  of  the  continued  sovereignty  and  terri- 
torial integrity  of  the  Chinese  State,  and  it  is  clear  that 
her  view  regarding  the  *  *  special  interests  ' '  of  Japan  in 
China  is  substantially  similar  to  that  which  has  been 
above  outlined.  As  appears  from  the  quotations  which 
have  been  made  from  Secretary  of  State  Lansing's  testi- 
mony before  the  Senate  committee,  America  was  emphatic 
in  disavowing  the  idea  that  Japan's  ''  special  interests  " 
had  a  connotation  that  would  support  a  claim  upon 

'•  See  Hornbeck,  Contemporary  Politics  in  the  Far  East,  pp.  352-359,  fcr 
an  excellent  discussion  of  the  claim  of  Japan  to  an  Asiatic  Monroe  Doctrine. 


444      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Japan's  part  to  exercise  a  political  control  in  or  over 
China.  Even  the  idea  of  a  special  political  **  influence  ** 
was  repudiated,  and,  for  this  reason  Mr.  Lansing  insisted 
upon  the  use  of  the  word  '  *  interests  ' '  although  Viscount 
Tshii  proposed  that  the  word  *'  influence  "  be  employed. 
And,  with  especial  emphasis,  Mr.  Lansing  refused  to 
acknowledge  that  Japan  had  in  China  any  ' '  paramount ' ' 
interests  or  influence.  And,  even  as  to  * '  interests, "  it  is 
clear  that  America,  and  the  same  is  presumably  of  the 
other  [Powers,  has  never  conceded  that  Japan  has  a  right 
to  claim  rights  of  commerce,  traffic  charges,  loans,  and 
economic  exploitation  other  than  those  available  to  the 
other  Powers.  A  fortiori,  Japan  has  not  been  conceded 
the  right  to  lay  exclusive  claim  to  such  rights  throughout 
China  or  within  special  areas.  And,  therefore,  upon 
principle,  America  has  refused  to  agree  to  the  admission 
of  Japan  to  the  present  pending  plan  of  a  new  interna- 
tional consortium  for  lending  financial  aid  to  China,  upon 
condition  that  new  enterprises  within  South  Manchuria 
and  Mongolia  should  be  excluded  from  the  operation  of 
the  proposed  loans,  and  that  thus  these  areas  should  be 
recognized  as  areas  within  which  Japan  should  have  pref- 
erential and  even  exclusive  rights  of  economic  exploita- 
tion. 

That  the  ambitions  of  Japan,  political  as  well  as 
economic,  go  far  beyond  the  foregoing  definition  of  her 
*  *  special  interests  ' '  in  China,  she  has  never,  in  so  many 
words,  formally  asserted.  But  upon  a  number  of  occa- 
sions, as  has  appeared  in  the  pages  which  have  gone 
before,  she  has  endeavored  to  obtain,  and  in  some  cases 
successfully,  privileges  not  consistent  with  the  foregoing 
definitions.    It  would  be  unduly  repetitious  to  give  again 


JAPAN'S  "  SPECIAL  INTERESTS  "  445 

at  this  point  an  account  of  these  instances,  but  reference 
may  at  least  be  made  to  the  following : 

In  Group  V  of  her  Twenty-one  Demands  Japan  asked 
for  special  political  rights  which,  if  granted,  would  have 
made  of  China  a  virtual  dependency  of  Japan. 

Under  the  treaties  and  notes  of  1915,  based  upon  the 
Twenty-one  Demands,  Japan  now  lays  claim  to  prefer- 
ential and  even  exclusive  rights  with  regard  to  the  build- 
ing of  railways  in  Manchuria  and  the  making  of  loans 
secured  by  local  revenues  of  the  three  Manchurian  Prov- 
inces. And,  in  the  negotiations  relating  to  the  pending 
Consortium,  Japan  has  insisted  that  Southern  Manchu- 
ria and  Eastern  Inner  Mongolia  be  exempted  from  its 
operations.  The  inconsistency  of  these  claims  with  Great 
Britain's  interpretation  of  the  ^'  open  door  "  principle, 
as  declared  to  Parliament  by  Sir  Edward  Grey,  and  with 
America's  interpretation  of  Japan's  "  special  interests  " 
has  been  referred  to.  That  these  claims  are  inconsistent 
with  the  provisions  of  the  Portsmouth  Treaty  and  the 
self-denying  portions  of  the  Lansing-Ishii  agreement  is 
also  clear. 

According  to  the  testimony  of  the  American  Secretary 
of  State,  Viscount  Ishii  several  times  urged  that  Japan 
be  recognized  to  have  a  paramount  interest  of  special 
**  influence  "  rather  than  mere  special  "interests  "  in 
China. 

Both  in  Manchuria  and  Shantung  the  Japanese  have 
shown  disregard  of  the  political  jurisdictional  rights  of 
the  Chinese  Government. 

Letters   of  the   Russian    Ambassador   at   Tokyo.     The 

obvious  divergence  between  the  position  of  America,  and 
presumably  of  the  other  Treaty  Powers,  and  the  acts  and 


446      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

expressed  wishes  if  not  the  avowed ,  interpretation  by 
Japan  of  her  *  *  special  interests  ' '  in  China,  gives  special 
interest  to  certain  statements  contained  in  diplomatic 
correspondence  in  1917  of  the  Russian  Ambassador  at 
Tokyo  to  his  own  government,  which  has  recently  been 
published  by  the  Bolsheviki.  Writing  on  October  22, 
1917,  the  Ambassador  said: 

If  the  United  States  thinks  .  .  .  that  the  recognition  of  Japan's 
special  position  in  China  is  of  no  practical  consequence,  such  a 
view  will  inevitably  lead  in  the  future  to  serious  misunderstandings 
between  us  and  Japan.  The  Japanese  are  manifesting  more  and 
more  clearly  a  tendency  to  interpret  the  special  position  of  Japan 
in  China,  inter  alia,  in  the  sense  that  other  Powers  must  not  under- 
take in  China  any  poUtical  steps  without  previously  exchanging 
views  with  Japan  on  the  subject — a  condition  that  would  to  some 
extent  establish  a  Japanese  control  over  the  Foreign  Affairs  of 
China.  On  the  other  hand,  the  Japanese  Government  does  not 
attach  great  importance  to  its  recognition  of  the  principle  of  the 
open  door  and  the  integrity  of  China,  regarding  it  as  merely  a 
repetition  of  the  assurances  repeatedly  given  by  it  earlier  to  other 
Powers  and  implying  no  new  restrictions  for  the  Japanese  policy 
in  China.  It  is  therefore  quite  possible  that  in  some  future  time 
there  may  arise  in  this  connection  misunderstandings  between  the 
United  States  and  Japan.  The  [Japanese]  Minister  for  Foreign 
Affairs  again  confirmed  today  in  conversation  with  me  that  in 
negotiations  by  Yiscount  Ishii  the  question  at  issue  is  not  some 
special  concession  in  these  or  other  parts  of  China,  but  Japan's 
special  position  in  China  as  a  whole. 

Again,  on  November  1,  1917,  in  a  confidential  letter  to 
the  Russian  Foreign  Office,  the  Russian  Ambassador  at 
Tokyo  wrote : 

Yiscount  Motono  [the  Japanese  Minister  for  Foreign  Affairs] 
mentioned  that  .  .  .  one  of  the  objects  [of  the  Lansing-Ishii 
Notes]  was  to  put  an  end  to  the  Genman  intrigue  intended  to  sow 


JAPAN'S  "  SPECIAL  INTERESTS  "  447 

discord  between  Japan  and  the  United  States,  and  to  prove  thereby 
to  the  Chinese  that  there  was  between  the  two  powers  a  complete 
agreement  of  view  with  regard  to  China,  who,  therefore,  must  not 
reckon  on  the  possibility  of  extracting  any  profit  from  playing  off 
one  against  the  other. 

To  my  question  whether  he  did  not  fear  that  in  the  future  mis- 
understandings might  arise  from  the  different  interpretations  by 
Japan  and  the  United  States  of  the  meaning  of  the  terms :  "  special 
position "  and  "  special  interests "  of  Japan  in  China,  Viscount 
Motono  replied  by  saying  that — [a  gap  in  the  original].  Never- 
theless, I  gained  the  impression  from  the  words  of  the  Minister 
that  he  is  conscious  of  the  possibility  of  misunderstandings  also 
in  the  future,  but  is  of  opinion  that  in  such  a  case  Japan  would 
have  better  means  at  her  disposal  for  carrying  into  effect  her  inter- 
pretation than  the  United  States. 

American  Note  of  June,  1917,  to  China,  and  Japan's 
Attitude  with  Regard  to  It.  An  episode  which  throws 
some  light  upon  the  character  of  the  special  position 
which  the  Japanese  Government  believes  itself  to  possess 
in  and  towards  China  is  the  irritation  which  was  ex- 
pressed in  June,  1917,  at  the  time  that  the  American 
Government  addressed  to  the  Chinese  Government  a  note 
in  which  it  declared  its  concern  at  the  continuance  of 
dissension  in  China,  and  expressed  its  desire  that  tran- 
quility and  political  co-ordination  might  be  forthwith 
re-established.    The  note  continued: 

The  entry  of  China  into  war  with  Germany  *  or  the  continuance 
of  her  relations  with  that  Government  are  matters  of  secondary 
consideration.  The  principal  necessity  for  China  is  to  resume  and 
continue  her  political  entity,  to  proceed  along  the  road  of  national 

*  China  had,  at  the  invitation  of  the  American  Government,  severed 
diplomatic  relations  with  Germany  on  T*.Iarch  14,  1917,  but  had  not  then 
declared  war.  This  declaration  of  war  was  not  issued  until  August  14, 
1917. 


448      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

development  on  which  she  has  made  such  marked  progress.  With 
the  form  of  government  in  China  or  the  personnel  vrhich  admin- 
isters that  Government  the  United  States  has  an  interest  only  in 
so  far  as  its  friendship  impels  it  to  be  of  service  to  China.  But  in 
the  maintenance  by  China  of  one  central  united  and  alone  respon- 
sible Government,  the  United  States  is  deeply  interested,  and  now 
expresses  the  very  sincere  hope  that  China,  in  her  own  interest,  and 
in  that  of  the  world,  will  immediately  set  aside  her  factional 
political  disputes,  and  that  all  parties  and  persons  will  work  for 
the  re-establishment  of  a  coordinate  Government  and  the  assump- 
tion of  that  place  ampng  the  Powers  of  the  world  to  which  China 
is  80  justly  entitled  but  the  full  attainment  of  which  is  impossible 
in  the  midst  of  internal  discord. 

The  sending  of  this  note  by  the  American  Government 
gave  great  umbrage  in  Japan.  The  newspapers  were 
specially  emphatic  in  declaring  that  not  only  had  it  been 
an  unwarranted  interference  by  the  American  Govern- 
ment with  domestic  affairs  in  China,  but  that  Japan  had 
been  affronted  by  not  having  been  officially  consulted  by 
the  American  Government  before  taking  this  step. 

One  ground  upon  which  the  Japanese  Government 
founded  its  criticism  of  the  action  of  the  United  States  ia 
submitting  this  note  to  the  Chinese  Government  was  that 
a  short  time  before  this  the  United  States  had  suggested 
to  Great  Britain  and  Japan  that  the  three  countries  make 
a  joint  representation  to  China  that  she  should  take  steps 
to  adjust  her  domestic  difficulties.  The  Japanese  Minister 
for  Foreign  Affairs  therefore  expressed  to  the  American 
Ambassador  at  Tokyo  his  surprise  that  America,  without 
waiting  for  Japan's  reply  to  this  proposition  and  without 
consulting  with  her,  should  have  made  independent  repre- 
sentations to  China.  To  this  the  American  Government 
replied  that  its  action  had  not  been  intended  to  anticipate 
or  to  prevent  co-operation  on  the  part  of  Japan. 


JAPAN'S  "  SPECIAL  INTERESTS  "  449 

The  irritation  aroused  in  Japan  by  the  note  of  June, 
1917,  it  may  be  observed,  did  not  deter  the  President  of 
the  United  States  in  October  of  the  next  year,  upon  the 
occasion  of  the  anniversary  of  the  Republic,  from  sending 
to  the  President  of  China  a  telegram  in  which  it  was 
suggested  that  **  This  is  an  auspicious  moment  .  .  .  for 
the  leaders  in  China  to  lay  aside  their  differences  and, 
guided  by  a  spirit  of  patriotism  and  self-sacrifice,  to  unite 
in  a  determination  to  bring  about  harmonious  co-opera- 
tion among  aU  elements  of  your  great  nation." 

Twice  during  the  Great  War,  Japan  vetoed  the  propo- 
sition of  her  allies  that  China  should  come  into  the  war 
upon  their  side.  However,  the  circumstances  under  which 
the  Entente  Powers  acquiesced  in  this  make  it  impossible 
to  hold  that  they  then  conceded  the  right  of  Japan  to  be 
consulted  or  to  have  a  determining  voice  with  regard  to 
the  political  policies  which  the  other  Powers  might  desire 
to  pursue  with  regard  to  China."* 

•  Mr.  Millard  in  his  most  recent  book.  Democracy  and  the  Eastern  Ques- 
tion, p.  99,  makes  the  statement  founded,  he  says,  upon  information  which 
came  from  a  "  perfectly  reliable  source,"  that  when  the  Ambassadors  of 
Great  Britain,  France  and  Russia,  in  1915,  submitted  to  Viscount  Ishii, 
the  Minister  for  Foreign  Affairs  at  Tokyo,  the  proposition  that  President 
Yuan  Shih-kai  had  made  that  China  come  into  the  war  upon  the  side  of 
the  Allies,  "Viscount  Ishii"  (to  quote  the  words  of  Millard)  "demurred 
both  to  the  proposal  and  to  the  arguments  that  were  advanced.  He  said 
that  Japan  considered  developments  with  regard  to  China  as  of  paramount 
interest  to  her,  and  she  must  keep  a  firm  hand  there.  Japan  could  not 
regard  with  equanimity  the  organization  of  an  efficient  Chinese  army  such 
as  would  be  required  for  her  active  participation  in  the  war,  nor  could 
Japan  fail  to  regard  with  uneasiness  a  liberation  of  the  economic  activities 
of  a  nation  of  four  hundred  millions  people." 

Other  authorities  have  quoted  Viscount  Ishii's  words  upon  this  occasion 
somewhat  differently,  but  to  substantially  the  same  effect. 

Viscount  Fshii,  however,  on  April  24,  1919,  issued  at  Washington  a  state- 
ment in  which  he  expressly  denied  that  he  had  ever  used  the  language  thus 
attributed  to  hkn.    In  the  course  of  this  statement  he  said: 

29 


450      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  episode  has  been  spoken  of  because  in  some  quar- 
ters the  statement  has  been  made  that  at  the  time  Japan 
had  claimed  such  a  political  influence  in,  and  even  over, 
China,  as  to  make  it  improper  that  other  nations  should 
communicate  directly  with  that  country  upon  political 
matters  without  first  inquiring  of  Japan  whether  the 
action  proposed  would  be  deemed  prejudicial  to  her, 
Japan's,  interests. 


"  Was  I  apprehensive  of  the  moral  awakening  of  the  400,000,000  Chinese  T 
The  idea  is  fantastic.  It  is  to  effect  this  very  awakening  of  the  Chinese 
that  Japan  has  been  putting  forth  all  efforts  for  these  many  years ;  sending 
professors  to  China  and  welcoming  Chinese  students  to  Japan.  So  long  as 
China  remains  in  a  state  of  lethargy,  she  is  in  danger  of  her  existence. 
And  that  danger  is  at  the  same  time  Japan's  danger.  Japan's  security  lies 
in  the  awakening  and  rising  to  power  of  China."  He  then  goes  on  to  say 
that  inducing  China  to  enter  the  war  in  1915  was,  however,  quite  another 
matter:  that  the  country  was  then  in  a  critical  political  condition.  Presi- 
dent Yuan  had  started  his  monarchical  movement,  armed  resistance  to  this 
had  already  sprung  up  in  Yunnan  and  was  increasing  each  day,  and  the 
military  value  to  the  Entente  of  China's  participation  would  have  been 
almost  nil.  "  The  mere  fact  of  a  declaration  of  war  by  China  would  have 
immensely  added  to  the  excitement  of  the  people,  and  rendered  confusion 
worse  confounded  throughout  the  whole  country.  The  greatest  sufferer 
from  such  a  condition  in  China  would  be,  next  after  China  herself,  her 
neighbor,  Japan.  ...  I  know  that  my  successor  at  the  Foreign  OfRce, 
Tokyo,  took  two  years  later  a  different  view  on  this  question.  He  had 
probably  his  own  reason  in  the  presence  of  the  changed  situation." 


CHAPTER  XVII 
Mongolia  and  Tibet 


Mongolia.  Since  1911  Mongolia  has  played  a  somewhat 
important  part  in  the  international  policies  of  China  and 
it  is  therefore  necessary  to  devote  a  section  to  it.  The 
story  of  these  recent  years  has  been  one  of  an  attempt 
upon  the  part  of  China  to  retain  her  sovereignty,  or  at 
least  suzerainty,  over  this  immense  reach  of  country  as 
against  the  efforts  of  Eussia  to  draw  the  outer  or  western 
portion  under  her  own  influence  and  political  control,  and 
of  Japan  to  do  the  same  with  reference  to  Eastern  Inner 
Mongolia. 

**  Mongolia,  as  a  geographical  term,  denotes  all  that 
great  stretch  of  territory  lying  between  the  organized 
provinces  of  China  on  the  south  and  Siberia  on  the  north. 
It  covers  an  area  of  nearly  1,400,000  square  miles,  but 
has  a  population  of  no  more  than  2,000,000.  Outer  Mon- 
golia .  .  .  has  a  population  of  about  500,000  Mongols, 
200,000  Chinese  and  some  5,000  Russians.  The  central 
portion  of  Mongolia  is  a  lofty  plateau  about  4,000  feet 
above  the  sea  level  and  largely  desert.  Southern  or  Inner 
Mongolia  has  a  fertile  soil  and  Outer  Mongolia  to  the 
north  of  the  plateau  shows  great  stretches  of  green 
pasture  lands. 

"  The  Mongols  are  mostly  nomads.  There  are  very 
few  towns  in  the  country  and  the  agricultural  districts 
are  settled  for  the  most  part  by  Chinese  colonists,  who 
are  encroaching  upon  the  pastures  of  the  Mongols,  to  the 

451 


452      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

great  annoyance  of  the  latter,  at  an  average  rate  esti- 
mated as  a  mile  a  year  along  a  frontier  of  1,500  miles. 

*  *  Mongolia  is  divided  into  two  great  divisions,  Inner 
Mongolia,  the  region  lying  nearest  to  China  and  compris- 
ing territories  inhabited  by  the  tribes  which  first  acknowl- 
edged the  overlordship  of  the  Manchus,  and  Outer  Mon- 
golia, embracing  the  remainder  of  the  country.  The  Inner 
Mongols  still  retain  the  organization  into  six  leagues 
adopted  by  the  successors  of  Genghis  Khan  when  all  Asia 
lay  beneath  their  sway. "  ^ 

Russo-Mongolian  Treaty  of  1912.  In  July,  1911,  due  to 
irritation  arising  from  the  attempt  of  China  to  pursue 
a  systematic  scheme  of  colonization  and  to  introduce 
stricter  military  and  administrative  control,  a  gathering 
of  Mongol  Princes  declared  the  independence  of  Outer 
Mongolia  and  sent  a  mission  to  St.  Petersburg  to  obtain 
the  aid  and  protection  of  the  Czar.  This  fell  in  with  the 
wishes  of  the  Russian  Government,  which  offered  to 
mediate  between  China  and  Outer  Mongolia,  which  offer 
the  Chinese  Government  declined.^  On  November  3, 1912, 
however,  Russia  entered  into  an  agreement  with  Mon- 
golia according  to  which  it  was  provided  that :  ' 

Aeticle  1.  The  Imperial  Russian  Government  shall  assist  Mon- 
goHa  to  maintain  the  autonomous  regime  which  she  has  established, 
as  also  the  right  to  have  her  national  army,  and  to  admit  neither 

*  E.  T.  Williams  in  the  American  Journal  of  International  Laic,  October 
1916  (Vol.  X,  p.  798),  in  an  article  entitled  "  The  Relations  between  China, 
Russia  and  Mongolia." 

'  In  the  meantime  China  was  being  urged  by  Russia  to  consent  to  a 
renewal  with  some  changes  of  the  St.  Petersburg  Treaty  of  1881  which 
defined  the  authority  of  China  in  Hi  and  regulated  certain  matters  of 
frontier  trade.    See  China  Year  Book,  1913,  p.  567. 
» MacMurray,  No.  1912/12. 


MONGOLIA  AND  TIBET  453 

the  presence  of  Chinese  troops  on  her  territory  nor  the  colonization 
of  her  land  by  the  Chinese. 

Article  2.  The  Euler  of  Mongolia  and  the  Mongolian  Govern- 
mient  shall  grant,  as  in  the  past,  to  Eussian  subjects  and  trade  the 
enjoyment  in  their  possessions  of  the  rights  and  privileges  enu- 
merated in  the  protocol  annexed  hereto.  It  is  well  understood  that 
there  shall  not  be  granted  to  other  foreign  subjects  in  Mongolia 
rights  not  enjoyed  there  by  Eussian  subjects. 

Article  3.  If  the  Mongolian  Government  finds  it  necessary  to 
conclude  a  separate  treaty  with  China  or  another  foreign  Power, 
the  new  treaty  shall  in  no  case  either  infringe  the  clauses  of  the 
present  agreement  and  of  the  protocol  annexed  thereto,  or  modify 
them  without  the  consent  of  the  Imperial  Eussian  Government.* 

*  The  China  Year  Book,  1914,  p.  620,  gives  the  following  reasons  for  Rus- 
sia's interest  in  an  independent,  or  at  least  autonomous,  Outer  Mongolia: 
"  The  motives  underlying  Russian  action  are  a  desire  to  preserve  a  buffer 
between  her,  as  yet,  thinly-peopled  empire  in  Asia  and  the  areas  inhabited 
by  the  ever-spreading  Chinese.  This  desire  is  the  result  of  a  real  fear  of 
the  Chinese  from  the  economic  point  of  view,  and  of  the  knowledge,  based 
on  experience,  that;  the  Chinese  can  easily  out-trade  the  Russian,  and  in  an 
area  inhabited  in  common  would  eventually  have  the  Russian  working 
for  him. 

"  Secondly,  Russia  had  no  desire  to  see  a  Chinese  modern  military  force 
trained  and  quartered  in  Outer  Mongolia.  However  inferior  to  her  own 
troops,  and  however  small  this  force  might  be,  it  would  nevertheless  con- 
stitute a  menace  against  her  long  line  of  communication  with  the  Far  East, 
or  in  the  event  of  another  war  on  the  Pacific  coast,  Russia  would  have  had 
to  set  aside  a  suitable  force  to  match  these  Chinese  troops  in  case  they 
attempted  a  sudden  inroad  toward  the  Siberian  Railway. 

"  Thirdly,  Russia,  looking  far  ahead,  wished  to  maintain  free  of  any 
strong  alien  element  all  that  part  of  Mongolia  which  lies  north  of  the 
natural  frontier  which  ought  to  bound  her  Siberian  possessions  on  the 
south,  the  direction  of  which  is  generally  roughly  described  as  running 
from  near  Vladivostok  along  the  vague  line  of  the  Gobi  to  near  Chuguchak. 
This  does  not  mean  that  there  has  ever  been  any  serious  question  of 
annexing  Outer  Mongolia  or  of  colonizing  it.  .  .  .  But  Russia  would  like 
it  kept  free  from  development  by  anyone  else,  or  at  any  rate  by  the  Chinese, 
so  that  it  shall  remain  a  potential  field  for  the  employment  of  such  com- 
mercial and  industrial  energy  which  is  or  may  become  superfluous  in 
Siberia.  Finally,  when  Siberia  is  fully  developed,  then  it  will  be  time  to 
consider  the  political  status  of  Outer  Mongolia." 


454      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Russo-^Chinese  Understanding  of  1913.  On  November 
5,  1913,  Russia  and  China  came  to  an  understanding, 
which  was  embodied  in  a  declaration  and  exchange  of 
notes,  according  to  which  Russia  recognized  that  Outer 
Mongolia  was  under  the  suzerainty  of  China,  and  China 
recognized  the  administrative  automony  of  Outer  Mon- 
golia. In  conformity  with  this  automony,  China  engaged 
not  to  intervene  in  internal  matters  touching  upon  matters 
of  commerce  or  industry,  that  she  would  not  maintain 
troops,  or  maintain  civil  or  military  functionaries  in  the 
country  or  attempt  its  colonization.  Furthermore,  China 
declared  herself  ready  to  accept  the  good  offices  of  Russia 
for  the  establishment  of  relations  with  Outer  Mongolia 
conforming  to  the  principles  and  stipulations  of  the 
Russo-Mongolian  Protocol  of  October  21,  1912.  In  the 
note,  it  was  recognized  that  the  territory  of  Outer  Mon- 
golia was  a  part  of  the  territory  of  China ;  that  in  matters 
concerning  the  political  and  territorial  order  the  Govern- 
ment of  China  would  come  to  agreement  with  Russia  by 
negotiations  in  which  the  authorities  of  Outer  Mongolia 
should  take  part.  The  note  defined  in  a  very  general 
manner  the  extent  of  Outer  Mongolia.'' 

On  September  30,  1914,  Russia  entered  into  another 
treaty  with  Outer  Mongolia  by  which  she  still  further 
increased  her  influence  in  that  country  by  obtaining  the 
right  to  give  advice  regarding  what  railways  it  should 
build  and  the  procedure  to  be  followed  with  reference  to 
them.  Furthermore,  Mongolia  pledged  herself  to  consult 
with  Russia  before  making  concessions  for  railway  con- 
struction to  other  nations.® 

'For  texts  of  these  notes  and  declaration,  see  MacAIurray,  Xo.  1913/11. 
'MacMurray,  No,  1914/12. 


MONGOLIA  AND  TIBET  455 

Tripartite  Agreement  of  1915.  Thus  far  the  agreements 
had  been  between  either  Eussia  and  Mongolia  or  between 
Russia  and  China.  On  June  7, 1915,  however,  a  tripartite 
agreement  between  China,  Russia,  and  Outer  Mongolia, 
was  signed,  which  embodied  the  following  provisions : 

Outer  Mongolia  recognized  the  Sino-Russian  declara- 
tion and  notes  of  1913,  and  the  suzerainty  of  China. 

By  Article  3  it  was  declared  that  "  autonomous  Mon- 
golia has  no  right  to  conclude  international  treaties  with 
foreign  powers  respecting  political  and  territorial  ques- 
tions." Thus,  although  China  remained  nominally  su- 
zerain. Outer  Mongolia  was,  in  fact,  placed  under  the 
joint  protection  of  China  and  Russia. 

By  Article  5  China  and  Russia,  conformably  to  the 
Sino-Russian  declaration  of  1903,  recognized  *  *  the  exclu- 
sive right  of  the  autonomous  government  of  Outer  Mon- 
golia to  attend  to  all  the  affairs  of  its  internal  adminis- 
tration and  to  conclude  with  foreign  powers  international 
treaties  and  agreements  respecting  questions  of  commer- 
cial and  industrial  nature  concerning  autonomous  Mon- 
golia." 

By  Article  6,  China  and  Russia  engaged  * '  not  to  inter- 
fere in  the  system  of  autonomous  internal  administration 
existing  in  Outer  Mongolia. ' ' 

Other  articles  of  the  agreement  related  to  boundaries, 
titles,  customs,  administration  of  justice,  telegraphs  and 
posts,  etc.  These  provisions  are,  however,  too  detailed 
to  be  reproduced  here.'' 

Outer  Mongolia  Cancels  Its  Antonomy.  In  November, 
1919,  the  officials,  lamas,  and  Princes  of  Outer  Mongolia 

'  MacMurray,  No.  1915/10. 


456      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

issued  a  petition  to  the  Chinese  Government  in  which 
they  declared  that  they  surrendered  the  autonomy  of 
their  country  and  desired  again  to  be  admitted  as  an 
integral  portion  of  the  Republic  of  China.  This  action, 
it  was  declared,  they  took  in  view  of  the  fact  that  the 
Russians  at  the  time  had  no  united  government,  and  that 
pressure  was  being  exerted  by  irresponsible  gangs  of 
bandits  and  others  to  compel  Mongolia  to  rob  China  of 
all  her  reserved  control  of  the  country  in  order  that  a 
Pan-Mongolian  Empire  might  be  established.  The  peti- 
tion, after  reciting  these  facts,  continued: 

On  account  of  our  refusal  to  comply  with  their  wishes  these 
Russians  and  their  bandit  comrades  now  threaten  to  send  troops  to 
our  territory.  .  .  .  The  economic  condition  of  the  people  of  Outer 
Mongoha  is  indeed  miserable.  "We  desire  to  save  them  from  their 
misery,  but  we  have  no  funds  to  introduce  various  reforms.  Our 
troops  are  not  well  trained,  and  they  have  not  been  properly  armed 
and  clad.  Although  the  Central  Government  has  promised  to  re- 
lieve our  financial  difiBculties  and  afford  us  efficient  protection, 
nothing  has  yet  been  achieved.  Measures  have  not  yet  been  adopted 
to  promote  commerce  and  industry.  .  .  .  The  situation  is  cer- 
tainly critical.  In  the  hope  of  effecting  the  salvation  of  our  terri- 
tory, we,  officials  of  Outer  Mongolia,  recently  called  several  con- 
ferences of  princes  and  lamas  to  discuss  the  means  of  saving  the 
situation.  A  resolution  has  now  been  unanimously  passed  to  the 
following  effect.  "Whereas  the  friendly  feelings  between  China 
and  Outer  Mongolia  have  been  gradually  restored  and  the  old-time 
prejudices  have  disappeared,  and  whereas  both  sides  are  anxious  to 
promote  the  welfare  of  the  people  and  to  secure  for  them  permanent 
peace  and  tranquility,  we,  officials,  princes  and  lamas,  hereby  de- 
clare the  abolition  of  the  autonomy  of  Outer  Mongolia,  and  the 
restoration  of  the  relations  subsisting  under  the  late  Ching  Dynasty. 
All  Djazaks  shall  hereafter  be  subject  to  the  control  of  the  Central 
Government  which  shall  define  uniformly  all  their  rights  and  shall 
reform  our  internal  organization  and  resist  external  invasions  for 


MONGOLIA  AND  TIBET  457 

us,"  The  above  has  been  submitted  to  and  approved  by  the  Living 
Buddha.  ...  In  connection  with  foreign  relations  we  beg  further 
to  state  that  it  was  on  account  of  the  declaration  of  autonomy  that 
m  former  days  the  Sino-Kusso-Mongolian  Treaty  and  the  Eusso- 
Mongolian  Commercial  Treaty  were  concluded  and  notes  between 
China  and  Eussia  were  exchanged.  Since  we  are  willing  to  re- 
nounce Autonomy,  all  these  instruments  become  null  and  void 
automatically.  As  to  the  commercial  enterprises  started  by  Eus- 
sians  in  Outer  Mongolia,  the  Central  Government  must  undertake 
the  responsibility  of  making  arrangements  with  the  Eussians  when 
their  new  Government  is  established,  so  as  to  promote  friendship 
between  China  and  Eussia  and  to  protect  our  interests,  etc. 

After  reciting  the  petition,  portions  of  which  have  been 
quoted,  the  President  of  China,  in  a  mandate,  declared : 

The  above  Petition  is  most  sincerely  expressed  and  displays  the 
patriotism  of  the  Living  Buddha,  princes,  and  lamas,  who  have  as 
their  ideal  a  Eepublic  of  Five  Eaces,  of  the  same  origin.  Their 
Petition  is  hereby  granted,  and  the  desires  of  the  people  of  Outer 
Mongolia  are  hereby  complied  with.  The  dignity  of  the  Living 
Buddha  shall  hereafter  be  preserved  and  the  rights  and  privileges 
of  the  Chiefs  of  the  four  Leagues  respected.  The  old  system 
obtaining  under  the  late  Manchu  dynasty  is  hereby  restored,  and 
specially  favorable  treatment  shall  be  given  to  Outer  Mongoha. 
I,  President,  hope  that  peace  and  good  relations  will  forever  be 
maintained  between  the  Central  Government  and  Outer  Mongoha." 

Eastern  Inner  Mongolia.  The  attempts  of  Russia  to 
gain  a  paramount  influence  in  Outer  Mongolia  have  been 
duplicated  by  the  efforts  of  Japan  to  bring  Eastern  Inner 
Mongolia  within  that  same  sphere  of  special  interests 
and  control  which  includes  South  Manchuria.  This  was 
made  very  evident  in  the  Twenty-one  Demands  of  1915, 
and  those  based  upon  the  Chengchiatun  incident  in  1916. 

'  The  foregoing  excerpts  are  taken  from  Millard's  Review,  December  6, 
1919. 


458      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

It  will  be  remembered  that  in  Group  II  of  the  Twenty- 
one  Demands  Japan,  in  the  original  draft,  required  that 
her  subjects  should  be  free  to  reside  and  travel  in  South 
Manchuria  and  Eastern  Inner  Mongolia  and  to  engage 
in  business  and  iu  manufacture  of  any  kind  whatsoever, 
and,  for  such  purposes  to  lease  or  own  land  in  both  of 
these  territories.  Furthermore,  Japanese  subjects  were 
to  have  the  right  to  open  mines  in  Eastern  Mongolia  as 
well  as  in  South  Manchuria ;  if  political,  financial  or  mili- 
tary advisers  were  appointed,  Japan  was  first  to  be  con- 
sulted ;  and  her  consent  was  to  be  obtained  before  permis- 
sion could  be  given  by  Chiua  for  the  building  of  a  railway 
or  the  making  of  a  loan  for  the  building  of  a  railway  in 
either  of  these  areas. 

In  their  revised  form  all  of  these  demands  were  aban- 
doned so  far  as  Eastern  Inner  Mongolia  was  concerned, 
but  there  appeared  the  following  four  new  demands 
especially  relating  to  Eastern  Inner  Mongolia,  which 
were  to  be  embodied  in  an  exchange  of  notes. 

1.  The  Chinese  Govemmient  agrees  that  hereafter  when  a  for- 
eign loan  is  to  be  made  on  the  security  of  the  taxes  of  Eastern 
Inner  Mongolia,  China  must  negotiate  with  the  Japanese  Govern- 
ment first. 

2.  The  Chinese  Government  agrees  that  China  will  herself  pro- 
vide funds  for  building  the  railways  in  Eastern  Inner  Mongolia; 
if  foreign  capital  is  required,  she  must  negotiate  with  the  Japanese 
Government  first. 

3.  The  Chinese  Government  agrees,  in  the  interest  of  trade  and 
for  the  residence  of  foreigners,  to  open  by  China  herself,  as  soon 
as  possible,  certain  suitable  places  in  Eastern  Inner  Mongolia  as 
commercial  ports.  The  places  which  ought  to  be  opened  are  to  be 
chosen,  and  the  regulations  are  to  be  drafted,  by  the  Chinese  Gov- 
fmment,  but  the  Japanese  Minister  must  be  consulted  before 
making  a  decision. 


MONGOLIA  AND  TIBET  459 

4.  In  the  event  of  Japanese  and  Chinese  desiring  jointly  to 
undertake  agricultural  enterprises  and  industries  incidental  thereto, 
the  Chinese  Government  shall  give  its  permission. 

By  consulting  the  Notes  that  are  quoted  in  the  chapter 
dealing  with  South  Manchuria  it  will  be  seen  that  China 
was  constrained  to  grant  to  Japan  all  of  these  demands. 

Tibet.  The  political  status  of  Tibet  as  a  dependency  of 
China  has  given  rise  to  considerable  controversy  during 
recent  years  between  China  and  Great  Britain  as  well  as 
between  China  and  Tibet  itself.  The  following  facts 
regarding  this  country  and  the  treaties  and  diplomacy 
relating  to  it  are  taken,  in  the  main,  from  the  China  Year 
Book  for  1919,  and  the  Statesman's  Year  Book  for  1916. 

Tibet  came  under  the  suzerainty  of  China  in  the  seven- 
teenth century;  this  Chinese  control  was  strengthened 
during  the  eighteenth  century;  but  declined  during  the 
later  years  of  the  Manchu  dynasty. 

In  1888,  growing  out  of  Tibetan  aggressions  across  the 
Indian  border,  the  British  Government  of  India  inter- 
vened and  secured  from  China  the  signing  of  the  Tibet- 
Sikkim  Convention,^  according  to  which  the  boundary 
between  Sikkim  and  Tibet  was  defined  in  general  terms ; 
the  protectorate  of  the  British  Government  over  the 
Sikkim  State  recognized,  carrying  with  it  the  *'  direct 
and  exclusive  control  over  the  internal  administration 
and  foreign  relations  of  that  State  ' ' ;  the  obligation  of 
the  two  signatory  States  to  prevent  acts  of  aggression 
from  their  respective  sides  of  the  frontier  admitted ;  and 
the  imdertaking  entered  into  that  the  question  of  trade 
across  that  frontier  should  be  thereafter  discussed. 

•  Eertslei,  i,  p.  92. 


460      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

In  1893  such  trade  regulations  were  agreed  upon,  and 
China  undertook  to  enforce  them.  This,  however,  she 
failed  to  do,  and,  as  a  result.  Great  Britain  sent  the 
Younghusband  military  expedition  to  Lhasa,  the  capital 
of  Tibet,  which  led  to  the  establishment  of  direct  rela- 
tions between  Tibet  and  the  Indian  Government,  and  the 
signing  of  the  Convention  of  1894  between  Great  Britain 
and  Tibet,  the  rights  of  China  as  the  suzerain  State  being 
ignored. 

Out  of  these  acts  arose  a  considerable  exchange  of 
diplomatic  correspondence  and  negotiations  which  finally- 
resulted  in  the  Anglo-Chinese  Convention  of  1906  and 
the  Trade  Eegulations  of  1908.^« 

Relations  between  Tibet  and  China  having  become 
strained,  China,  in  1908  and  1909,  sent  military  expedi- 
tions into  Tibet  which  finally  reached  Lhasa.  The  Dalai 
Lama  fled  to  India  and  Chinese  control  over  Tibet  was 
greatly  strengthened.  However,  with  the  outbreak  of  the 
Eevolution  of  1911  in  China,  the  Chinese  garrison  in 
Tibet  mutinied,  the  Tibetans  seized  arms,  the  Dalai  Lama 
returned  from  India,  and,  as  a  result,  the  treaty  of  peace 
of  1912  was  signed  by  which  it  was  agreed  that  all  Chinese 
troops,  except  an  ordinary  escort  of  the  Amban  (the 
Chinese  representative)  should  be  withdrawn  from  Tibet. 

China,  however,  was  not  disposed  to  leave  matters  in 

"For  texts  of  the  conventions  of  1894  and  1906,  see  MacMurray,  No. 
1906/2.  In  1907  (September  23)  Great  Britain  and  Russia  signed  a  Con- 
vention in  which  the  two  Governments  agreed  mutually  to  respect  the 
territorial  integrity  of  Tibet  and  to  abstain  from  all  interference  with  its 
interior  administration;  and,  conformably  to  the  admitted  suzerainty  of 
China  over  Tibet,  to  deal  with  Tibet  (except  as  to  certain  commercial 
matters  fixed  by  the  Conventions  of  1904  and  1906)  only  through  China 
as  intermediary. 


MONGOLIA  AND  TIBET  461 

this  situation,  and  prepared  again  to  undertake  military 
operations  against  Tibet,  when  Great  Britain  intervened, 
and  asked  that  China  refrain  from  this  purpose,  it  being 
alleged  that  such  action  would  be  a  violation  of  the  Anglo- 
Chinese  Treaty  of  1906.  In  other  words  China's  suze- 
rainty over  Tibet  was  recognized,  but  Great  Britain 
would  not  allow  this  to  be  developed  into  sovereignty. 

Finally,  in  1914  (July  3),  a  tripartite  agreement  be- 
tween the  representatives  of  Tibet,  India,  and  China  was 
reached  and  initialed  by  them,  which  provided  that  Tibet 
should  be  divided,  for  administration  purposes,  into 
Outer  and  Inner  Tibet,  the  latter  being  the  territory  lying 
nearest  to  China.  Tibet  was  declared  to  form  a  part  of 
Chinese  territory  and  to  be  under  Chinese  suzerainty,  but 
the  autonomy  of  Outer  Tibet  was  to  be  recognized  and 
respected  by  China  and  both  Great  Britain  and  China 
were  to  abstain  from  all  interference  in  its  administra- 
tion. Furthermore,  China  was  to  undertake  not  to  con- 
vert Tibet  into  a  Chinese  province,  and  Outer  Tibet  was 
not  to  be  represented  in  any  future  Chinese  Parliament; 
nor  was  China  to  send  troops  thither  or  station  civil  or 
military  officers  there,  or  establish  there  Chinese  colonies. 
At  Lhasa  the  Chinese  were  to  be  permitted  to  maintain  a 
high  official  with  an  escort  not  exceeding  three  hundred 
men.  A  British  agent  was  to  have  the  right  to  visit 
Lhasa  with  his  escort  when  occasion  might  require.  The 
Tibetan  trade  regulations  of  1893  and  1908  were  to  be 
cancelled,  as  well  as  Article  3  of  the  Convention  of  April 
27,  1906.  Any  future  controversies  that  might  arise  be- 
tween China  and  Tibet  with  regard  to  the  convention 
were  to  be  referred  to  the  British  Government  for  adjust- 
ment. 


462      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  Chinese  Govenunent,  however,  repudiated  the 
action  of  its  representatives  in  agreeing  to  this  conven- 
tion, upon  the  ground  that  the  area  of  Chiamdo  had  been 
included  in  Outer  Tibet,  and  Litang  and  Batang  included 
in  Inner  Tibet — ^the  two  last  named  areas  being  aUeged 
to  belong  to  the  Province  of  Szechuan.  Upon  being  noti- 
fied of  this  repudiation,  Great  Britain  informed  China 
that,  until  she  signed,  she  would  be  refused  all  advan- 
tages and  privileges  which  the  convention  gave  her. 

At  the  time  of  this  writing  (1920)  British-Tibetan- 
Chinese  relations  still  remain  in  this  unsatisfactory  con- 
dition. 

Chinese  Turkestan  (Sinkiang).  This  Chinese  depen- 
ency,  under  the  Empire,  was  placed  under  the  general 
jurisdictional  oversight  of  the  Viceroy  of  Kansu  and 
Shensi.  Since  the  establishment  of  the  Eepublic  no  real 
administrative  control  over  this  region  has  been  exercised 
by  the  Government  at  Peking.  There  is,  in  fact,  little 
organized  government  in  Sinkiang,  such  local  political 
authority  as  exists  being  in  the  hands  of  the  native  tribal 
chieftains  (termed  Begs).  The  population  is  a  mixture 
of  Chinese,  Turks,  Mongols,  and  Hindus. 


CHAPTER  XVni 
Opium    , 


Deyelopmeni  of  the  Opium  Question.  Questions  relat- 
ing to  the  right  of  foreigners  to  import  opium  into  the 
country  have  played  so  important  a  part  in  the  foreign 
relations  of  China  that  a  separate  treatment  of  the  sub- 
ject is  demanded. 

Although  the  peculiar  properties  of  opium  and  the  fact 
that  it  could  be  obtained  from  the  poppy  plant  were  well 
known  to  the  Chinese  for  many  years  before,  there  is  no 
good  evidence  that  it  was  used  except  for  medicinal 
purposes  before  the  beginning  of  the  Manchu  rule 
(1644  A.  D.).  Early  in  the  eighteenth  century,  however, 
the  smoking  of  the  drug  had  become  a  widespread  vice, 
for  in  1729  we  find  an  edict  of  the  Emperor  forbidding 
the  sale  of  opium  and  the  maintenance  of  places  where  it 
might  be  smoked. 

From  this  time  on  the  attitude  of  the  Chinese  Govern- 
ment towards  the  use  of  opium  by  its  own  subjects  for 
other  than  medicinal  purposes  was  one  of  continuous 
official  hostility,  but  in  fact  its  use  for  smoking  rapidly 
spread  and  the  cultivation  of  the  poppy  within  China 
increased,  as  did  the  importations  of  the  drug  from  India 
which,  by  1790,  amounted  to  over  four  thousand  chests 
annually.  After  1799  this  trade  in  Indian  opium  was 
controlled  by  the  British  East  India  Company  which  had 
taken  over  the  opium  monopoly  which  had  previously 
been  in  Mogul  hands. 

463 


464      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

From  the  year  1799  until  the  so-called  Opium  War  of 
1840,  terminated  by  the  Nanking  Treaty  of  1842,  there 
was  constant  friction  between  the  Chinese  authorities 
and  the  British  traders  with  regard  to  the  importation 
of  Indian  opium  into  China.  The  Government  at  Peking 
never  ceased  to  declare  the  trade  contraband,  but  the 
local  officials  at  Canton  and  other  southern  ports  connived 
at  it,  and  so  successfully,  that  the  annual  importations  by 
1839  had  increased  to  eighteen  thousand  chests.  At  this 
time,  to  use  Morse's  description,  **  the  trade  though  not 
legalized  was  fully  regulated,  and  it  is  a  misuse  of  terms 
to  apply  the  word  *  smuggling  '  to  what  went  on  then ;  the 
foreign  merchant  imported  his  opium  without  conceal- 
ment, but,  during  the  twenty  years  of  the  period,  instead 
of  bringing  it  to  his  factory  at  Canton  and  storing  it  there 
or  at  Macao,  he  deposited  it  on  store-ships  at  Lintin ;  he 
sold  it,  generally  speaking,  and  obtained  payment  at 
Canton,  all  subsequent  proceedings  being  the  concern  of 
the  purchasers,  Chinese  subjects ;  and  he  delivered  it  on 
board  his  own  ships,  usually  at  Lintin,  to  a  certain  extent 
at  definite  points,  on  the  coast  to  the  east  and  north,  but 
always  under  official  oversight. ' '  ^ 

In  1839  the  Emperor  sent  to  Canton  a  **  Special  High 
Commissioner,"  one  Lin  Tse-su,  to  put  a  stop,  if  possible, 
to  this  contraband  trade.  His  high-handed  acts,  includ- 
ing the  seizure  and  destruction  of  very  large  stocks  of 
opium  (over  twenty  thousand  chests)  belonging  to  for- 
eign traders — ^mostly  British  and  American — and  the 
imprisonment  for  a  time  of  the  entire  body  of  foreign 
residents  in  Canton  within  their  factories  and  thus  hold- 

.'  Trade  and  Administration  of  China,  p.  345. 


OPIUM  465 

ing  them  as  **  hostages  "  until  his  orders  were  complied 
with,  led  to  the  so-called  Opimn  War. 

Though  Lin's  actions  were  the  proximate  cause  of  this 
Sino-British  conflict,  it  is  far  from  correct  to  speak  of 
that  war  as  waged  solely  for  the  purpose  of  maintaining 
the  rights  or  interests  of  the  opium  traders.  For,  as  has 
been  stated  in  one  of  the  early  chapters  of  the  present 
volume,  the  general  relations  between  foreigners  and  the 
Chinese  authorities  had  for  years  been  in  a  most  unsatis- 
factory condition — the  foreigners  refusing  to  admit  their 
amenability  to  local  laws  and  local  authorities,  the 
Chinese  asserting  their  territorial  jurisdiction,  but  refus- 
ing to  enter  into  formal  diplomatic  relations  with  western 
nations  as  with  equals,  and  failing  to  fulfil  other  obliga- 
tions which  were  recognized  by  accepted  international 
law  and  practice  as  resting  upon  all  independent  States. 
Thus,  aside  from  opium,  there  were  intolerable  elements 
in  the  situation  which  had  to  be  corrected. 

It  seems  pretty  clear,  however,  that,  to  the  Chinese, 
the  war  appeared  to  have  been  fought  by  the  British  to 
compel  them  to  legalize  the  importation  of  Indian  opium, 
and,  therefore,  they  were  surprised  when,  in  the  treaty 
of  peace  which  was  drawn  up  by  their  victorious  foe, 
there  was  no  mention  of  this  subject.^  Just  why  this  was 
so,  is  not  perfectly  clear,  but  in  result,  the  situation  was 
left  worse  than  it  was  before  the  war,  for  now  the  trade 
was  neither  regulated  nor  legalized.    *'  The  result  was 

•  By  Article  IV  of  the  Nanking  Treaty  the  Chinese  were  obligated  to  pay 
$6,000,000  in  compensation  or  indemnity  for  the  destruction  in  1839  at 
Canton  under  Commissioner  Lin's  orders,  of  the  stocks  of  opium  held  by 
foreign  traders.  It  was,  therefore,  not  unnatural  that  this  should  have 
tended  to  convince  the  Chinese  that  the  war  had  been  fought  in  the  interest 
of  the  opium  trade. 

30 


466      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  drive  the  importers  into  closer  relations  with  the 
officials,  who  were  in  a  position  to  impede  the  traffic  at 
all  places  along  the  coast;  to  what  extent  they,  and  to 
what  extent  the  purchasers,  made  the  actual  arrange- 
ments, who  was  the  active  agent  in  perverting  from 
their  duty  the  only  too  willing  representatives  of  the 
humiliated  Emperor,  is  not  known,  because  the  whole 
traffic  during  this  period  is  covered  with  a  veil  of  secrecy 
and  mystery.  From  this  driving  of  the  traffic  away  from 
the  light  of  day,  from  the  increased  activity  of  the 
importers  in  supplying  an  increased  demand,  from  the 
greater  enterprise  of  the  smugglers,  whether  they  were 
foreign  or  Chinese,  and  from  the  greater  laxity  and 
depravity  of  the  officials  of  China — from  all  these  causes 
came  two  consequences:  from  the  20,619  chests  in  1838 
the  import  of  opium  increased  to  about  50,000  chests  in 
1850,  and  to  85,000  chests  in  1860;  and,  as  opium  had 
debauched  the  Chinese,  the  opium  traffic  debauched  the 
foreign  traders  and  dragged  them  down  from  their  high 
estate. ' '  ^ 

In  1858,  by  the  Sino-British  Tientsin  Treaty,  the  im- 
portation of  opium  for  the  first  time,  since  the  original 
prohibition,  became  legalized.  The  Chinese  finding  them- 
selves unable  to  prevent  the  extensive  smuggling  in  of 
the  drug,  now  placed  its  importation  upon  a  recognized 
basis,  a  duty  of  thirty  taels  per  picul  (133  pounds)  being 
imposed. 

This  provision  is  found  in  the  Rules  of  Trade  estab- 
lished in  pursuance  of  Articles  XXVI  and  XXVIII  of 
the  treaty.  Rule  5  reads:  "The  restrictions  affecting 
trade  in  opium,  cash,  grain,  [etc.],  .  .  .  are  relaxed  under 

•Morse,  Op.  cit.,  p.  346. 


OPIUM  467 

the  following  conditions:  Opium  will  henceforth  pay  30 
taels  per  picul  import  duty.  The  importer  will  sell  it  only 
at  the  port.  It  will  be  carried  into  the  interior  by  Chinese 
only,  and  only  as  Chinese  property;  the  foreign  trader 
will  not  be  allowed  to  accompany  it.  The  provisions  of 
Article  IX  of  the  Treaty  of  Tientsin  by  which  British 
subjects  are  authorized  to  proceed  into  the  interior  with 
passports  to  trade,  will  not  extend  to  it,  nor  will  those 
of  Article  XVIII  of  the  same  treaty,  by  which  the  transit 
dues  are  regulated ;  the  transit  dues  on  it  will  be  arranged 
as  the  Chinese  Government  sees  fit;  nor,  in  future  revi- 
sions of  the  Tariff,  is  the  same  rule  of  revision  to  be 
applied  to  opium  as  to  other  goods."  * 

In  1876  by  the  Chefoo  Convention,  Great  Britain 
agreed  that  the  likin  tax  on  imported  opium  should  be 
collected  at  the  same  time  as  the  import  duty  was  paid. 
In  1885,  the  amount  of  this  likin  tax  was  fixed  at  80  taels 
a  picul,  that  is,  including  the  import  duty,  a  total  of  110 
taels  a  picul.  This  remained  the  amount  that  the  Chinese 
Imperial  Government  might  collect  until  1911,  when  the 
British  Government  agreed  that  it  might  be  increased  to 
350  taels. 

*  Commenting  upon  the  circumstances  under  which  this  legalization  of 
the  trade  was  eflfected,  Morse  says  ( Op.  cit.,  p.  23 )  :  "  The  smuggling  had 
reached  tremendous  proportions,  demoralizing  the  oflScials  whose  duty  it 
was  to  enforce  the  law  and  to  the  merchants  to  whom  it  was  a  forbidden 
trade.  The  American  Envoy  was  appalled  by  the  demoralization  and  sug- 
gested legalization  as  the  lesser  of  the  two  evils.  Lord  Elgin,  who  was  in 
a  position  to  dictate  terms,  was  reluctant  to  take  the  initiative;  but  the 
Chinese  negotiators  were  ready  to  relieve  the  financial  diflSculties  of  the 
Empire  by  securing  for  the  treasury  the  revenue  which  prohibition  only 
diverted  into  private  pockets;  and  the  trade  was  legalized  by  including 
opium  in  the  tariff  which  was  appended  to  the  treaty."  See  also,  for  a 
fuller  statement  of  the  suggestion  from  the  American  Envoy  that  the  trade 
be  legalized,  pp.  348  et  seq.  of  Morse's  volume. 


468      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  1887  there  were  further  regulations  agreed  upon 
with  a  view  to  controlling  the  smuggling  of  the  drug  into 
China  from  Hongkong  and  Macao. 

America  and  the  Chinese  Opium  Trade.  In  its  treaty 
of  1844  (Article  XXXIII)  with  China,  the  United  States 
had  agreed  that  its  citizens  who  might  attempt  to  trade 
clandestinely  with  such  parts  of  China  as  were  not  open 
to  foreign  trade,  or  who  should  trade  in  opium  or  any 
other  contraband  article  of  merchandise,  should  **  be 
subject  to  be  dealt  with  by  the  Chinese  Government,  with- 
out being  entitled  to  any  countenance  or  protection  from 
that  of  the  United  States."  Furthermore,  the  United 
States  Tmdertook  to  take  measures  to  prevent  its  flag 
from  being  abused  by  subjects  of  other  nations  as  a  cover 
under  which  to  violate  the  laws  of  the  Chinese  Empire. 

In  1858  by  the  Tientsin  Treaty  with  China,  the  United 
States  adopted  the  same  trade  regulations  as  those  of 
Great  Britain,  including  the  legalization  of  the  importa- 
tion of  opium  with  a  duty  of  30  taels  per  picul. 

In  1880  the  American  and  Chinese  Governments 
mutually  agreed  that  Chinese  subjects  should  not  be 
permitted  to  import  opium  into  any  of  the  ports  of  the 
United  States,  and  also  that  American  citizens  should 
not  import  opium  into  any  of  the  open  ports  of  China  or 
transport  it  from  one  open  port  to  another,  or  buy  or  seU 
opium  in  any  of  the  Chinese  open  ports.  *  *  This  absolute 
prohibition, '  *  the  treaty  declared,  '  *  which  extends  to 
vessels  owned  by  the  citizens  or  subjects  of  either  Power, 
and  employed  by  other  persons  for  the  transportation  of 
opium,  shall  be  enforced  by  appropriate  legislation  on 
the  part  of  China  and  the  United  States ;  and  the  benefits 


OPIUM  469 

of  the  favored  nation  clause  in  existing  treaties  shall  not 
be  claimed  by  citizens  or  subjects  of  either  Power  as 
against  the  provisions  of  this  article. ' '  '^ 

By  Article  XVI  of  the  Sino-American  Treaty  of  1903, 
the  American  Government  agreed  to  the  prohibition  by 
the  Chinese  Government  of  the  importation  into  China 
of  morphia  and  of  instruments  for  its  injection,  excepting 
such  amounts  or  instruments  as  might  be  needed  for 
medicinal  purposes,  and  under  regulations  to  be  framed 
by  China  which  would  restrict  the  use  of  such  imports  to 
such  purposes.  **  This  prohibition,''  the  treaty  declared, 
*'  shall  be  uniformly  applied  to  such  importation  from 
all  countries.  The  Chinese  Government  undertakes  to 
adopt  at  once  measures  to  prevent  the  manufacture  in 
China  of  morphia  and  of  instruments  for  its  injection.'* 

The  foregoing  provisions  in  the  American  treaty  were 
agreed  to  by  all  the  other  Treaty  Powers  and  went  into 
effect  January  1,  1909. 

China  Prohibits  the  Smoking:  of  Opium.  In  1906  in 
response  to  a  great  agitation  which  had  been  carried  on 
by  enlightened  Chinese,  the  Imperial  Government  issued 
an  edict  providing  that  all  opium  smoking  should  cease 
within  ten  years,  and  that  measures  be  devised  for  the 
prevention  of  the  cultivation  of  the  poppy  plant  within 
the  empire.  These  regulations  were  issued  in  November 
of  the  same  year,  and  were  supplemented  by  further 
edicts  in  1907. 


'  The  legislation  called  for  by  this  provision  was  embodied  in  the  Act  of 
Congress  of  February  23,  1887  (24  Stat,  at  Large,  p.  409).  By  the  act  of 
February  14,  1902,  the  importation  of  opium  into  the  Philippine  Islands 
was  prohibited. 


470      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

Anglo-Chinese  Agreement  of  1907.  By  an  agreement 
negotiated  during  December,  1907,  and  the  following  Jan- 
uary Great  Britain  agreed  to  reduce  each  year  the  export 
of  opium  from  India  to  all  countries  by  one-tenth  of  the 
annual  import  of  Indian  opium  into  China,  China  at  the 
same  time  agreeing  to  take  effective  steps  to  reduce  by 
one-tenth  each  year  the  cultivation  of  the  poppy  within 
her  own  borders.  This  agreement  was  to  run  for  three 
years  at  the  expiration  of  which  time,  if  it  was  found  that 
China  was  faithfully  and  effectively  carrying  out  her 
part  of  the  bargain,  the  arrangement  was  to  continue 
until,  at  the  end  of  ten  years,  the  cultivation  of  the  poppy 
in  China  would  be  wholly  stopped  and  the  importation 
of  Indian  opium  reduced  to  16,000  chests  per  annum. 

On  May  8,  1911,  the  three  years  having  elapsed,  and 
China  having  been  shown  to  have  carried  out  thus  far  her 
part  of  the  bargain,  an  agreement  between  Great  Britain 
and  China  was  entered  into  under  the  terms  of  which 
China  was  to  continue  to  diminish  the  production  of 
opium  within  her  borders  in  the  same  proportion  that  the 
annual  export  of  opium  from  India  was  to  be  reduced  by 
the  British  Government.®  Article  II  provided:  *'  His 
Majesty's  Government  agree  that  the  export  of  opium 
from  India  to  China  shall  cease  in  less  than  seven  years 
if  clear  proof  is  given  of  the  complete  absence  of  produc- 
tion of  native  opium  in  China."  Furthermore,  Great 
Britain  agreed  that,  without  waiting  for  the  expiration 
of  the  seven  years,  Indian  opium  should  not  be  carried 
into  any  Province  of  China  which  could  establish  by  clear 
evidence  that  it  had  effectively  suppressed  the  cultivation 

•  For  the  texts  of  the  so-called  "  Ten-Year  Agreement  "  of  1907-8,  and  of 
the  Convention  of  1911,  see  MacMurray,  No.  1911/4. 


OPIFM  471 

and  importation  of  native  opium,  with  the  proviso,  how- 
ever, that  the  ports  of  Shanghai  and  Canton  should  not 
be  closed  to  the  drug  until  the  final  steps  were  taken  by 
the  Chinese  Government  for  the  total  suppression  of  the 
trade  and  production. 

There  can  be  no  question  that,  after  the  Eepublican 
Eevolution  of  1911,  and  the  administrative  demoraliza- 
tion which  followed,  the  measures  of  the  Chinese  Govern- 
ment for  the  suppression  of  the  cultivation  of  opium  were 
not  as  effectively  enforced  as  they  previously  had  been, 
and  there  is  some  evidence  to  the  fact  that  the  growing 
of  the  poppy  has  been  upon  the  increase  in  some  of  the 
Provinces.  Great  Britain,  however,  did  not  raise  the 
point  that  the  agreements  of  1907  and  1911  had  not  been 
fully  carried  out  upon  the  part  of  China,  and  therefore, 
on  December  31,  1917,  the  importation  of  opium  into 
China  and  its  cultivation  in  China  became  illegal. 

International  Opium  Commission  at  Shanghai.  In  Feb- 
ruary, 1909,  an  international  Opium  Commission  met  at 
Shanghai,  at  the  suggestion  of  the  United  States,  to 
consider  the  matter  of  the  production,  sale  and  use  of 
opium  and  its  derivatives,  which,  it  was  recognized,  had 
become  a  matter  of  serious  import  to  all  the  civilized 
peoples  of  the  world,  and  which  could  be  effectively  regu- 
lated only  by  the  concerted  action  of  all  or  at  least  the 
more  important,  of  the  Powers.  The  technical  basis  for 
this  Commission  was  found  in  the  provision  made  by  the 
First  Hague  Conference  for  the  assembling  of  *'  Inter- 
national Commissions  of  Inquiry. ' '  The  more  important 
of  the  findings  of  this  Commission  were  as  follows : 

The  sincerity  of  the  efforts  of  the  Government  of  China 


472      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  eradicate  the  production  and  suppress  the  consump- 
tion of  opium  throughout  its  territories  was  recognized. 
The  recommendation  was  made  that  each  delegation 
should  move  its  own  Government  to  take  action  to  sup- 
press the  smoking  of  opium  within  its  own  borders,  due 
regard  being  had  for  varying  circumstances  of  each 
country. 

The  Commission  found  that  "  the  use  of  opium  in  any 
form  otherwise  than  for  medical  purposes  is  held  by 
almost  every  participating  country  to  be  a  matter  for 
prohibition  or  for  careful  regulation ;  and  that  each  coun- 
try in  the  administration  of  its  system  of  regulation 
purports  to  be  aiming,  as  opportunity  offers,  at  progress- 
ively increasing  stringency." 

It  was  also  found  that  each  of  the  governments  repre- 
sented had  strict  laws  upon  their  statute  books  aimed 
directly  or  indirectly  at  preventing  the  smuggling  of 
opium  and  its  derivatives,  and  the  opinion  was  declared 
by  the  Commission  that  **  it  is  also  the  duty  of  all  coun- 
tries to  adopt  reasonable  measures  to  prevent  at  points 
of  departure  the  shipment  of  opium,  its  alkaloids,  deriva- 
tives, and  preparations,  to  any  country  which  prohibits 
the  entry  of  opium,  its  alkaloids,  derivatives  and  pre- 
parations. * ' 

The  Commission  further  found  that  the  manufacture, 
sale  and  distribution  of  morphia,  already  constituted  a 
grave  danger,  and  that  the  morphia  habit  showed  signs 
of  spreading. 

Finally,  with  reference  especially  to  the  situation  in 
China,  the  Commission  urged  that  those  nations  having 
**  concessions  "  or  **  settlements  "  in  China  should  take 
effective  steps  to  close  up  opium  divans  in  them,  and  that 


OPIUM  473 

each  delegation  should  move  its  Government  to  enter  into 
negotiations  with  the  Chinese  Government  with  a  view  to 
effective  and  prompt  measures  for  the  prohibition  in  such 
concessions  or  settlements  of  the  trade  and  manufacture 
of  such  anti-opium  remedies  as  contained  opium  or  its 
derivatives. 

International  Opium  Conference  of  1911  at  The  Hague. 

Following  directly  from  the  Commission  of  Inquiry  which 
had  been  held  at  Shanghai,  came  the  International  Con- 
ference which  was  convened  in  1911  at  the  Hague  in  order 
to  give  eifect  to  the  recommendations  which  the  Commis- 
sion had  made.  The  labors  of  the  Conference  resulted  in 
the  draft  of  an  International  Opium  Convention  which 
was  signed  on  January  23,  1912.*^ 

This  instrument  provided  in  substance  as  follows : 

1.  The  Powers  should  enact  effective  laws  or  regula- 
tions for  the  control  of  the  production  and  distribution 
of  raw  opium  in  case  such  laws  were  not  already  in  force. 

2.  "With  due  regard  to  differences  in  commercial  condi- 
tions, they  would  limit  the  number  of  ports  through  which 
the  export  or  import  of  raw  opium  would  be  permitted. 

3.  They  would  prohibit  the  export  of  raw  opium  to 
countries  which  might  prohibit  its  import;  or  control 
export  to  countries  which  might  restrict  its  importation. 

4.  They  would  prohibit  the  import  or  export  of  raw 
opium  except  by  duly  authorized  persons. 

5.  They  would  take  measures  for  the  gradual  and  ef- 
fective suppression  of  the  manufacture  of,  or  internal 
trade  in,  and  use  of  prepared  opium,  due  regard  being 
had  to  the  varying  circumstances  of  each  country. 

'For  the  texts  of  the  Convention  and  of  the  Protocols  of  the  First,  Sec- 
ond and  Third  Conferences,  see  MacMurray,  No.  1912/2. 


474      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

6.  They  would  prohibit  the  import  and  export  of  pre- 
pared opium;  those  Powers,  however,  which  were  not 
ready  to  take  this  step  immediately,  to  take  it  as  soon  as 
possible,  and,  in  the  meantime,  to  restrict  the  number  of 
places  from  which  the  prepared  opium  might  be  exported, 
to  prohibit  its  export  to  countries  which  forbade  its  im- 
port, and  not  to  permit  export  except  by  specially  author- 
ized persons  and  under  conditions  of  making,  etc.,  which 
would  comply  with  the  regulations  of  the  importing  coun- 
try which  might  desire  to  restrict  its  entry. 

7.  Medicinal  opium  was  defined  to  include  drugs  con- 
taining not  less  than  ten  per  cent,  of  opium,  and  speci- 
fically held  to  include  morphia,  cocaine,  and  heroin,  and 
the  undertaking  entered  into  to  enact  laws  or  regulations 
to  confine  to  medical  and  legitimate  purposes  the  manu- 
facture, sale,  and  use  of  these  drugs  and  their  respective 
salts.  The  nations  were  to  co-operate  with  one  another 
to  prevent  the  use  of  these  drugs  except  for  medicinal 
purposes. 

8.  The  contracting  Powers  were  to  use  their  best  ef- 
forts to  control  all  persons  manufacturing,  importing, 
selling,  distributing  and  exporting  morphia,  cocaine,  and 
their  respective  salts,  as  well  as  the  buildings  in  which 
such  industry  or  trade  might  be  carried  on,  and,  to  this 
end,  to  establish  certain  measures  which  the  convention 
enumerated. 

9.  They  would  prohibit,  as  regards  national  trade,  the 
delivery  of  morphia,  cocaine,  etc.,  to  unauthorized 
persons. 

10.  They  would  take  measures  to  ensure  that  these 
drugs  should  not  be  exported  from  their  ports  or  colonies 
or  leased  territories,  or  other  possessions,  to  countries  or 


OPIUM  475 

their  possessions  except  when  consigned  to  persons  fur- 
nished with  licenses  or  permits  by  the  importing  country. 
With  this  object  in  view  each  government  was  to  com- 
municate from  time  to  time  to  the  governments  of  the 
exporting  countries  lists  of  the  persons  so  authorized  to 
import. 

11.  They  would  consider  the  possibility  of  enacting 
laws  making  it  a  penal  offense  to  be  in  illegal  possession 
of  raw  opium,  morphine,  cocaine,  and  their  respective 
salts. 

Articles  XV  to  XIX  inclusive  related  specifically  and 
especially  to  conditions  in  China,  and  provided : 

a.  The  Treaty  Powers,  in  conjunction  with  the  Chinese 
Government  to  take  the  necessary  steps  to  prevent  smug- 
gling of  opium  and  its  derivatives  into  China  as  well  as 
into  their  Far  Eastern  possessions  and  leased  areas  in 
China ;  the  Chinese  Government  on  its  part,  to  take  steps 
to  prevent  smuggling  of  the  drugs  from  China  into  the 
territories  mentioned. 

b.  The  Chinese  Government  to  promulgate  pharmacy 
laws  regulating  the  sale  and  distribution  of  opium  and 
its  derivatives.  These  laws  the  Treaty  Powers  were  to 
examine,  and,  if  found  acceptable,  to  apply  them  to  their 
nationals  residing  in  China. 

c.  The  Treaty  Powers  to  adopt  measures  to  restrict 
and  control  the  smoking  of  opium  in  their  leased  terri- 
tories, settlements,  and  concessions  in  China,  and  to  sup- 
press existing  opium  dens,  and  prohibit  the  use  of  the 
drug  in  places  of  entertainment  and  brothels. 

d.  The  Powers  to  take  effective  measures,  in  concert 
with  China,  to  reduce  the  number  of  places  in  which  raw 
or  prepared  opium  might  be  sold. 


476      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

e.  Those  Powers  having  post  offices  in  China  to  adopt 
effective  measures  to  prevent  the  illegal  import  into 
China  or  their  illegal  transmission  from  place  to  place 
in  China,  of  opium  and  its  derivatives. 

The  following  voeux  were  also  expressed: 

"  I.  The  Conference  considers  it  desirable  to  direct 
the  attention  of  the  Universal  Postal  Union — 

"1.  To  the  urgency  of  regulating  the  transmission 
through  the  post  of  raw  opium ; 

**  2.  To  the  urgency  of  regulating  as  far  as  possible 
the  transmission  through  the  post  of  morphia,  cocaine, 
and  their  respective  salts  and  other  substances  referred 
to  in  Article  XIV  of  the  Convention ; 

'*  3.  To  the  necessity  of  prohibiting  the  transmission 
of  prepared  opium  through  the  post. 

**  n.  The  Conference  considers  it  desirable  to  study 
the  question  of  Indian  hemp  from  the  statistical  and  sci- 
entific point  of  view,  with  the  object  of  regulating  its 
abuses,  should  the  necessity  thereof  be  felt,  by  internal 
legislation  or  by  international  agreement. ' ' 

The  Convention  was  to  go  into  force  three  months 
after  notification  that  it  had  been  ratified  by  the  Govern- 
ments of  all  the  signatory  Powers. 

Second  International  Opium  Conference  at  The  Hague, 
1913.  The  first  International  Opium  Conference  had  been 
attended  by  twelve  Powers  and  the  Convention  drawn  up 
by  it  was  signed  only  by  these  twelve.  There  was,  how- 
ever, a  provision  that  other  Powers  should  be  asked  to 
sign  and  the  United  States  was  requested  to  obtain,  if 
possible,  the  adherence  of  the  Latin- American  States,  and, 
as  a  result  all  those  States  have  since  given  their  adher- 


OPIUM  477 

ence  to  the  agreement.  The  signatures  of  all  the  other 
European  States,  which  the  Netherlands  Government 
sought  to  secure,  were  not  obtained,  and,  therefore,  in 
pursuance  of  a  permissive  provision  of  the  agreement 
of  January  23, 1912,  the  Netherlands  Government  invited 
the  Powers  again  to  send  representatives  to  the  Hague 
in  order  that  steps  might  be  taken  to  secure,  if  possible, 
the  adherence  of  the  Powers  that  had  not  signed,  or,  fail- 
ing complete  success  in  that  respect,  to  provide  that  the 
Convention  might  go  into  effect,  as  to  the  Government 
that  might  sign  it. 

This  Second  Conference  adopted  a  resolution  express- 
ing the  wish  that  the  as  yet  non-signatory  Governments 
should  sign,  and  that  *  *  in  case  the  signature  of  all  Powers 
invited  .  .  .  shall  not  have  been  secured  by  the  31st  of 
December  1913,  the  Government  of  the  Netherlands  will 
immediately  invite  the  signatory  Powers  on  that  date  to 
designate  delegates  to  take  up  the  question  whether  it 
is  possible  to  put  the  International  Opium  Convention  of 
January  23,  1912,  into  operation." 

Third  International  Opium  Conference  at  The  Hague, 
1914.  In  pursuance  of  this  last  provision,  a  Third  Inter- 
national Opium  Conference  was  convoked  at  the  Hague 
on  June  15, 1914,  which  resolved  that  it  would  be  possible 
to  bring  the  Convention  into  force  as  to  agreeing  Powers 
notwithstanding  that  some  of  the  originally  invited  Pow- 
ers might  not  have  signed  it,  and  fixed  December  31, 1914, 
as  the  date  when  the  Convention  should  become  binding 
upon  the  Governments  accepting  it.  It  was  provided, 
however,  that  opportunity  should  still  remain  for  other 
Powers,  after  that  date,  to  give  their  adherence  to  it. 


478      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

The  Chinese  Government  gave  its  adherence  to  the 
Convention  on  February  11,  1915. 

At  the  present  writing  (February,  1920)  the  Conven- 
tion of  1912  has  been  signed  by  the  following  Powers: 
Denmark,  Siam,  Guatemala,  Honduras,  Venezuela,  United 
States  of  America,  Portugal,  China,  Sweden,  Belgium, 
Italy,  Great  Britain,  Netherlands,  Nicaragua,  Norway, 
Brazil,  Equador,  Uruguay  and  Spain.* 

The  Convention  has  been  signed,  but  not  yet  ratified, 
by  Germany,  Japan,  Persia,  and  Russia,  original  Powers 
represented  at  the  First  Conference,  and  also  by  a  large 
number  of  invited  Powers  who  were  not  represented  at 
the  First  Conference. 

Paris  Treaty  of  1919.  By  Article  295  of  the  Paris  Treaty 
of  1919  with  Germany  it  is  provided  as  follows : 

Those  of  the  High  Contracting  Parties  who  have  not  yet  signed, 
or  who  have  signed  but  not  yet  ratified,  the  Opium  Convention 
signed  at  The  Hague  on  January  23,  1912,  agree  to  bring  the  said 
Convention  into  force,  and  for  this  purpose  to  enact  the  necessary 
legislation  without  delay  and  in  any  case  within  a  period  of  twelve 
months  from  the  coming  into  force  of  the  present  Treaty. 

Furthermore,  they  agree  that  ratification  of  the  present  Treaty 
should  in  the  case  of  Powers  which  have  not  yet  ratified  the  Opium 
Convention  be  deemed  in  all  respects  equivalent  to  the  ratification 
of  that  Convention  and  to  the  signature  of  the  Special  Protocol 
which  was  opened  at  The  Hague  in  accordance  with  the  resolutions 
adopted  by  the  Third  Opium  Conference  in  1914  for  bringing  the 
said  Convention  into  force. 


"  The  "  Protocol "  for  putting  the  Convention  into  force  has  been  signed 
by  the  United  States,  China,  Netherlands,  Honduras,  Norway,  Belgium  and 
Luxembourg. 


OPIUM  479 

For  this  purpose  the  Government  of  the  French  Eepublic  will 
communicate  to  the  Government  of  the  Netherlands  a  certified  copy 
of  the  protocol  of  the  deposit  of  ratifications  of  the  present  Treaty, 
and  will  invite  the  Government  of  the  Netherlands  to  accept  and 
deposit  the  said  certified  copy  as  if  it  were  a  deposit  of  ratifications 
of  the  Opium  Convention  and  a  signature  of  the  Additional  Pro- 
tocol of  1914. 

Events  in  China  Relating  to  Opium  Since  1917.    It  has 

already  been  seen  that  under  the  Anglo-Chinese  Agree- 
ment of  1911  foreign  trade  in  and  domestic  production  of 
opium  was  to  become  illegal,  so  far  as  China  was  con- 
cerned, December  31, 1917.  By  an  agreement  entered  into 
on  May  1,  1915,  between  the  Shanghai  and  Hongkong 
Opium  **  Combines  "  which  then  held  large  stocks  of 
opium,  and  a  Special  Envoy  of  the  Chinese  Government 
for  the  prohibition  of  the  sale  of  opium  in  the  Provinces 
of  Kiangsu,  Kiangsi,  and  Kwangtung,  the  Envoy  had 
agreed  to  petition  the  Chinese  Government  to  take  strin- 
gent and  effective  measures  for  the  detection  and  sup- 
pression of  the  illicit  sales  of  opium  with  a  view  to  its 
extinction  and  to  enable  the  Combines  to  dispose  of  their 
stock  of  Indian  opium  within  the  period  ending  March 
31,  1917.  As  this  date  approached,  the  Combines  found 
that  they  would  not  be  able  to  sell  the  great  amount  of 
the  drug  which  they  still  had  on  hand,  and  which,  at  the 
then  current  market  rates  was  worth  a  good  many  mil- 
lions of  dollars.  After  much  talk,  with  suggestions  of 
foreign  intervention  on  behalf  of  the  Combines,  for  which 
there  was  no  basis  whatever,  and  allegations  of  bribery 
which,  upon  their  face,  did  not  seem  incredible,  an  agree- 
ment was  signed  on  January  28, 1917,  between  the  Shang- 
hai Opium  Combine  and  Feng  Kuo-Chang,  the  Tuchun  of 


480      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Kiangsu,  the  Civil  Governor  of  Kiangsu,  and  the  Special 
Envoy  for  the  prohibition  of  the  sales  of  opium  in  Ki- 
angsu, Kiangsi,  and  Kwangtung,  acting  for  the  Chinese 
Government,  according  to  which  the  Chinese  Government 
was  to  purchase  from  the  Combine  the  residue  of  stock 
of  Indian  opium  remaining  in  the  hands  of  the  Combine 
on  March  31, 1917  (excluding  the  stock  of  opium  in  Hong- 
kong on  January  1,  1917),  at  8200  Taels  of  Shanghai 
Sycee  per  chest.  The  number  of  chests  thus  to  be  pur- 
chased was  estimated  at  2100.  The  object  of  the  Govern- 
ment in  purchasing  the  opium  was  declared  to  be  that  it 
might  be  used  for  medicinal  purposes  and  not  otherwise 
for  gain.  Payment  was  to  be  made  in  Chinese  Govern- 
ment bonds  secured  on  revenue  derived  from  the  Stamp 
Duty. 

It  was  soon  rumored  that  it  was  the  intention  of  those 
interested  in  this  transaction  to  resell  the  opium  to  a 
Shanghai  syndicate  at  an  advanced  price,  the  Syndicate, 
it  being  alleged,  to  advance  $5,000,000  to  the  Peking  Gov- 
ernment and  to  obtain  the  right  to  sell  the  opium  in  the 
Provinces  of  Kiangsu  and  Kiangsi.  This  plan  aroused 
such  widespread  opposition  upon  the  part  of  enlightened 
Chinese  and  brought  forth  such  strong  protests  from  the 
American  and  British  Governments  as  being  in  substan- 
tial violation  of  the  Agreement  of  1911,  that,  in  result, 
the  Chinese  Government  bought  twelve  hundred  chests, 
the  amount  then  held  by  the  Combine,  and,  in  January, 
1919,  publicly  destroyed  it. 

Smuggling  and  Sale  of  Morphia  in  China  by  the  Japanese. 

There  is  no  question  that  during  recent  years  great 
amounts  of  morphia  have  been  illegally  introduced  and 


OPIUM  481 

sold  in  China,  and  administered  to  the  natives  in  the 
form  of  hypodermic  injections.  The  responsibility  for 
this  has  been  laid  almost  wholly  upon  the  Japanese,  the 
drug  being  brought  into  the  country,  it  has  been  claimed, 
either  under  the  guise  of  military  supplies  or  through 
the  Japanese  parcel  post  system.  The  Japanese  Govern- 
ment has  insisted  that  it  has  never  given  any  official 
sanction  to  this  trade,  but  has  been  compelled  to  admit 
the  extensive  participation  of  its  nationals  in  it,  and  has 
expressed  its  intention  to  make  greater  efforts  in  the 
future  to  control  its  subjects  in  this  respect. 

Persian  and  Turkish  Opium.  Persia  and  Turkey  not 
being  Powers  in  treaty  relation  with  China,  China  is  able 
to  deal  with  them  free  from  any  contractual  obligations. 
She  therefore  prohibited  the  import  of  Turkish  and  Per- 
sian opium,  such  prohibition  becoming  effective  January 
1,  1912. 

BIBLIOGRAPHICAL  NOTE 

A  very  great  deal  has  been  wjitten  with  regard  to  the  Opium 
Question  in  its  relation  to  China.  The  more  imiportant  documents 
and  facts  may,  however,  be  readily  obtained  from  the  following 
sources : 

American  Journal  of  International  Law,  Supp.  Vol.  vi  (1912) 
pp.  177-192  (Text  of  the  International  Opium  Convention  of  Jan- 
uary 23,  1912). 

American  Journal  of  International  Law,  Suppl.  Vol.  iii  (1909) 
pp.  253-276  (documents). 

American  Journal  of  International  Law,  Vol.  vii  (1913)  pp. 
838-847  (The  Second  International  Opium  Conference). 

American  Journlal  of  International  Law,  Vol.  iii,  pp.  648-673, 
and  828-868  (Two  articles  by  Dr.  Hamilton  Wright  on  The 
Shanghai  International  Opium  Comimission), 

31 


482      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

American  Journal  of  International  Law,  Vol.  vi  (1912)  pp.  865- 
889,  and  Vol.  vii  (1913)  pp.  108-139  (Two  articles  by  Mr.  Ham- 
ilton Wright  on  The  International  Opium  Conference  at  The 
Hague). 

China  Year  Book,  1919,  Chapter  xxviii,  pp.  664-691. 

China  and  the  Far  East.  Clark  University  Lectures,  published 
in  1910.  Chapter  ix,  by  Mr.  Hamilton  Wright  entitled  "The 
Opium  Problem :  Its  History  and  Present  Condition." 

Far  Eastern  Review,  June,  1917,  and  July,  1918  (Events  since 
1917). 

Trade  and  Administration  of  China,  by  H.  B.  Morse,  Chap- 
ter XI. 


CHAPTER   XIX 

China's  Foreign  Debts  and  Financial  Commitments 


The  attempt  will  be  made  in  this  chapter  to  discuss  the 
present  financial  obligations  of  the  Chinese  Government 
only  in  so  far  as  they  concern  China's  relations  to  foreign 
Powers  or  to  their  banking  groups. 

Certain  Features  of  Chinese  Loans.  Certain  special 
features  which  have  characterised  the  public  loans  of 
China  have  first  to  be  mentioned  in  order  that  the  signi- 
ficance of  what  follows  may  be  clearly  appreciated. 

1.  Although  the  potential  financial  resources  of  the 
Chinese  people  are  very  great,  it  has  not  as  yet  been 
practicable  for  the  Government  to  utilize  them  except  to  a 
very  slight  extent.  During  recent  years  many  new  taxes 
have  been  authorized  by  the  Peking  Governmnt  and,  in 
some  cases,  fairly  effectively  collected,  but  it  still  remains 
true  that  the  Chinese  people  are  very  lightly  taxed.* 
The  per  capita  accumulated  wealth  is  very  small,  but 
none  the  less  there  are  many  great  fortunes  and  a  still 
greater  number  of  moderately  large  ones  in  China,  and, 
therefore,  could  the  Chinese  Government  command  the 
full  confidence  of  its  own  subjects,  it  would  be  able  to 
float  large  domestic  loans.  In  fact,  however,  it  has  not 
been  able  to  command  this  confidence  and  therefore  has 
been  obliged  to  resort  to  foreign  money  markets  when 

*  It  is  true  that  the  Chinese  people  obtain  comparatively  little  from  their 
Government  in  return  for  the  taxes  they  do  pay. 

483 


484      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

funds  in  adddition  to  those  obtainable  from  taxation  have 
been  needed.^ 

2.  The  foreign  loans  to  China,  though  made  by  private 
banking  interests,  have,  in  almost  all  cases,  had  back  of 
them  the  approval  and  diplomatic  support  of  their  re- 
spective Governments  which  have  used  almost  every 
possible  mode  of  international  action  to  enforce  the 
claims  which  their  respective  nationals  have  based  upon 
their  contracts  with  the  Chinese  Government.  In  fact, 
it  has  been  practically  impossible  to  distinguish  between 
the  public  and  private  obligations  of  the  Chinese  Gov- 
ernment. In  this  connection  may  be  quoted  the  following 
illuminating  paragraph  from  Mr.  MacMurray's  Intro- 
ductory Note  to  his  compilation  of  China  *s  Treaties. 
After  referring  to  the  various  periods  of  China's  inter- 
national relations,  Mr.  MacMurray  says : 

Throughout  these  phases  of  development,  financial,  economic  and 
industrial  concessions  have  been  made  the  objects  of  international 
policies ;  such  advantages  have  been  sought  by  Governments, — ^both 
directly,  in  the  form  of  general  conventional  stipulations,  and  in- 
directly, in  the  form  of  special  grants  to  particular  banks  or  indus- 
trial organizations, — through  all  the  means  available  to  one  State 
•n  its  intercourse  with  another,  the  holders  of  such  concessions  have 
often  spoken  with  the  voice  of  their  Governments  in  insisting  upon 

'  Some  domestic  loans  were  floated,  especially  during  the  early  years  of 
the  Republic.  These  loans  though  large  in  nominal  amount,  were  greatly 
undersubscribed,  and  thus  did  not  meet  even  the  most  pressing  public 
needs.  During  the  last  few  years,  so  great  has  been  the  administrative 
and  political  demoralization  of  the  country,  the  successful  flotation  of  a 
domestic  loan  of  any  considerable  size  has  been  an  impossibility.  The 
several  domestic  loans  issued  by  the  Republic  are  enumerated  by  Mac- 
Murray  in  the  footnotes  to  No.  1913/2  which  gives  the  text  of  the  First 
Year  (1912)  Loan.  The  general  fate  of  these  domestic  loans  has  been 
that  the  unsubscribed  portions  have  been  held  until  the  government  has 
reached  a  situation  of  flnancial  extremity,  when  they  have  been  peddled 
oflf  to  foreign  (Belgian  and  Japanese)   banks  at  a  ruinously  low  price. 


CHINA'S  FOEEIGN  DEBTS  485 

their  own  construction  of  the  rights  granted  to  them;  and  such 
comlmitments  to  individuals  of  one  nationality,  even  when  left  un- 
utilized and  allowed  to  lapse  by  the  terms  of  the  concession,  have 
now  and  again  been  claimed  as  a  basis  of  protest  against  a  grant 
to  nationals  of  any  other  country.  The  result  of  this  merging  of 
individual  with  governmental  interests  has  been  that  matters  which 
would  elsewhere  be  of  merely  commercial  character,  susceptible  of 
judicial  determination  in  case  of  dispute,  are  in  China  matters  of 
international  political  concern,  for  the  settlement  of  which  the 
ultimate  recourse  is  to  diplomatic  action.  It  is  thus  in  a  sense  true 
that  the  international  status  of  the  Chinese  Government  is  deter- 
mined and  conditioned  by  its  business  contracts  with  individual 
firn^s  or  syndicates,  scarcely  if  at  all  less  than  by  its  formal  treaties 
with  other  Governments.  It  is  at  any  rate  seldom  that  any  inter- 
national situation  relating  to  China  can  be  fully  understood  without 
reference  to  the  intricate  fabric  of  quasi-public  as  well  as  of  public 
obligations  which  qualify  the  freedom  of  action  of  the  Chinese 
Government. 

3.  The  lending  Powers,  if  we  may  speak  of  tliem  as 
such,  have  operated  in  the  main  through  particular  bank- 
ing or  investment  agencies,  and  have  applied  their  chief 
diplomatic  and  official  support  to  those  agencies.  Thus 
Japanese  loans  have  been  made,  for  the  most  part, 
through  the  Yokohama  Specie  Bank  (the  official  repre- 
sentative of  Japanese  financial  interests  in  the  interna- 
tional Consortium  for  Chinese  business),  and  a  syndicate 
consisting  of  the  Bank  of  Taiwan,  the  Bank  of  Chosen, 
and  the  Industrial  Bank  of  Japan,  which  syndicate  has 
enjoyed  the  support  of  the  Japanese  Government  in  trans- 
actions independent  of  the  Consortium.  The  three  banks 
in  the  syndicate  have  done  business  separately,  but,  in 
the  main,  their  activities  in  China  have  been  joint 
operations.^ 

*Al80  might  be  mentioned  the  Chinese  Exchange  Bank  which,  though 
nominally  a  Sino-Japanese  concern,  is  actually  controlled  by  the  Japanese. 


486      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

British  financial  interests  have  operated  through  the 
Hongkong  and  Shanghai  Banking  Corporation,  and  the 
British  and  Chinese  Corporation,  formed,  in  1908,  by  the 
Hongkong  and  Shanghai  Banking  Corporation  and  the 
trading  firm  of  Jardine,  Matheson  and  Company. 

German  financial  interests  have  operated  in  China 
through  the  Deutsch-Asiatische  Bank. 

Russian  financial  interests  have  employed  as  their 
agency  the  Banque  Russo-Asiatique,  earlier  known  as  the 
Banque  Russo-Chinoise. 

France  has  used  the  Banque  de  Tlndo-Chine,  and,  in 
association  with  it,  the  Credit  Lyonnais,  the  Comptoir 
National  d'Escompte  de  Paris,  and  other  banks. 

Belgium  has  used  the  Societe  Beige  d 'Etudes  de  Che- 
mins  Fer  en  Chine. 

American  interests,  for  the  most  part,  have  acted 
through  a  banking  group  (originally  constituted  by  J.  P. 
Morgan  and  Company,  Kuhn,  Loeb  and  Co.,  the  First 
National  Bank  of  New  York,  and  the  National  City  Bank 
of  New  York),  the  International  Banking  Corporation, 
and  Lee,  Higginson  and  Co.* 

4.  A  number  of  the  loans  have  carried  with  them  pre- 
ferences or  options  with  regard  to  future  loans. 

5.  In  very  many  cases  the  determination  by  China  as 
to  the  parties  from  whom  the  loans  were  to  be  obtained 
has  been  controlled  by  the  **  Spheres  of  Interest " 
claimed  by  the  several  Powers  in  China. 

6.  Some  of  the  loans,  especially  those  for  general  gov- 
ernmental expenses  or  for  purposes  of  administrative 
reorganization,  have  carried  with  them  specified  amounts 
of  **  control  "  over  certain  of  the  revenue  services  of 

*But  see  post  as  to  the  proposed  new  international  Consortium. 


CHINA'S  FOREIGN  DEBTS  487 

China  as  well  as  over  the  manner  in  which  the  proceeds 
of  the  loans  were  to  be  expended. 

7.  And,  finally,  most  of  the  railway  and  mining  loans 
have  carried  with  them  rights  of  control,  npon  the  part 
of  the  lending  parties,  alike  over  the  construction  and 
operation  of  the  roads  or  mines  and  over  their  finances. 
These  rights  of  control  will  be  more  specifically  described 
in  the  chapter  which  follows  dealing  with  Railway  Rights 
in  China.  The  earliest  of  these  loans  were  made  directly 
by  the  Chinese  Government,  but  the  later  ones,  not  so 
made,  have  been  guaranteed  by  that  Government  as  to 
interest  and  amortization  payments,  and,  in  some  cases, 
certain  public  (provincial)  revenues  have  been  pledged 
as  security.  ,» -    ^ 

China's  Public  Debts  Classified.  The  public  debts,  as 
determined  by  the  purposes  for  which  they  were  con- 
tracted, may  be  divided  into  three  classes:  (1)  War  and 
Indemnity  Loans,  (2)  General  or  Administrative  Loans 
and  (3)  Industrial,  that  is.  Railway  and  Mining  Loans.® 

•There  are  also  provincial  and  so-called  private  and  short-term  loans, 
and  also  domestic  loans,  which  because  they  have  no  bearing  upon  foreign 
relations,  are  not  considered  in  this  volume. 

With  regard  to  long  term  Domestic  Loans,  the  China  Year  Book  for  1919 
gives  the  following  information: 

"  A  new  departure  in  China's  financial  history  was  made  with  the  suc- 
cessful flotation  of  a  domestic  loan  in  1914.  The  amount  fixed,  $16,000,000 
was  oversubscribed  by  $8,000,000,  and  the  loan  was  accordingly  raised  to 
$24,000,000,  carrying  six  per  cent,  interest.  RepajTnent  is  to  begin  with 
the  fourth  year  with  a  drawing  of  one-ninth  of  the  total.  In  1915  a  second 
domestic  loan  for  $24,000,000  was  floated,  the  Hong  Kong  and  Shanghai 
Banking  Corporation  agreeing  to  act  as  one  of  the  issuing  and  subscription 
agencies.  The  rate  was  6  i)er  cent.,  and  the  issue  price  90,  the  loan  to  be 
repaid  in  eight  years.  This  loan,  which  was  also  oversubscribed,  substan- 
tial contributions  coming  from  Chinese  overseas,  is  secured  on  Native 
Customs  and  Shansi  likin,  and  the  Ministry  of  Finance  undertakes  to  hand 


488      FOEEIGN"  RIGHTS  AND  INTERESTS  IN  CHINA 

War  and  Indemnity  Debts.  Until  the  Chinese-Japanese 
War  of  1894  China  had  had  practically  no  foreign  debt. 
For  the  waging  of  that  war  and  the  payment  of  the 
indemnity  exacted  by  victorious  Japan,  China  was 
obliged  to  borrow  large  amounts  from  abroad.^ 

Franco-Russian  Loan  of  1895.  By  a  contract  signed 
July  6,  1895,  China  borrowed  from  a  Franco-Russian 
syndicate  400,000,000  francs  at  four  per  cent.,  the  issue 
price  being  94i/^  (the  Chinese  receiving,  however,  94l^) 
the  loan  to  be  repaid  in  thirty-six  years,  amortization  to 
begin  in  1896,  and  secured  by  revenues  from  the  Maritime 

to  the  Inspector-General  of  Customs  the  equivalent  of  the  first  year's 
interest  and  to  pay  subsequently  $120,000  monthly  for  interest  in  the 
succeeding  years. 

"  In  April,  1918,  regulations  were  sanctioned  by  the  President  for  the 
floating  of  the  Seventh  Year  Domestic  Loan  of  the  Republic  for  $93,000,- 
000,  to  enable  the  €rovemment  to  pay  oflf  its  indebtedness  to  the  Bank  of 
China  and  the  Bank  of  Commimications.  Two  bond  issues  were  to  be 
made  simultaneously,  one  called  the  Short  Term  Loan  Bonds  (5  year,  6 
per  cent,  bonds ) ,  to  the  amount  of  $48,000,000  redeemable  within  five 
years  by  semi-annual  drawings  of  one-tenth  of  the  total,  and  payable  from 
monthly  instalments  released  by  the  Maritime  Custom  of  the  Deferred 
Boxer  Indemnity  Fund,'  the  other,  called  the  Six  Per  Cent.  Public  Loan 
Bonds,  to  the  amount  of  $45,000,000  (20  year  bonds)  redeemable  after  ten 
years  by  semi-annual  drawings  of  one-twentieth  of  the  total,  and  secured 
by  a  second  charge  on  the  Native  Customs  duties. 

**  In  addition  to  the  above  loans  the  Government  is  responsible  for  the 
Military  Public  Loan  issued  in  1911,  at  Nanking  for  $6,367,640,  bearing 
8  per  cent,  interest.  The  terms  of  repayment  provide  for  payment  of  one- 
fifth  of  the  amount  annually  from  the  second  year.  A  public  drawing  was 
held  in  Peking  on  February  20,  1915,  and  bonds  to  the  value  of  $1,153,528 
were  redeemed.  A  six  per  cent.  "Public  Loan"  of  $4,006,920  also  dates 
from  the  first  year  of  the  Republic.  Interest  on  this  loan  has  been  paid 
once;  repayment  starts  from  the  fifth  year." 

•The  indemnity  to  Japan,  including  the  additional  siun  exacted  because 
of  the  retrocession  of  the  Liaotung  Peninsula,  amounted  to  Tls.  230,000,- 
000.  "i  r 


CHINA'S  FOREIGN  DEBTS  489 

Customs  and  the  guarantee  of  the  Eussian  Governments 
Section  9  of  the  Articles  of  Agreement  read:  **  The 
present  loan  is  guaranteed  by  the  duties  levied  by  the 
Maritime  Customs  of  China,  and  by  the  deposit  of 
customs  bonds.  Furthermore,  in  the  event  that  the  service 
of  the  loan  should  for  any  reason  whatsoever  come  to  be 
suspended  or  delayed,  the  Imperial  Government  of 
Russia,  by  agreement  with  the  Imperial  Government  of 
China,  undertake,  vis  a  vis  the  contracting  banks  and 
firms,  the  obligation  to  find,  itself,  and  to  place  at  their 
disposal  in  good  time,  as  they  fall  due,  whatever  sums 
are  necessary  for  the  payment  of  the  coupons  and  of  the 
amortized  bonds  of  the  present  loan. ' ' 

This  undertaking  upon  the  part  of  the  Russian  Govern- 
ment was  embodied  in  an  exchange  of  declarations  by  the 
Russian  and  Chinese  Governments. 

In  the  protocol  of  these  declarations  it  was  declared 
that  until  the  loan  should  be  fuUy  liquidated,  **  no  other 
Chinese  loan  subsequently  concluded  shall  be  served  out 
of  the  receipts  of  the  Chinese  Maritime  Customs  before 
full  provision  shall  have  been  made  for  the  service  of  the 
interest  and  amortization  of  the  above-mentioned  loan." 
It  was  also  provided  that  should  the  Russian  Govern- 
ment be  called  upon  to  make  good  its  guarantee  the 
Chinese  Government  would  furnish  the  Russian  Govern- 
ment with  additional  security,  the  nature  of  which  would 
be  the  subject  of  a  special  agreement  to  be  negotiated 
between  the   plenipotentiaries    of  the   two   Powers   at 


'  For  texts  of  this  loan  contract  and  of  this  declaration  and  accompany- 
ing protocol,  and  of  the  contract  of  guarantee  given  by  the  Eussian  Min- 
istry of  Finance  to  the  lending  syndicate,  see  MacMurray,  Nos.  1895/6  and 
1895/7. 


490      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

Peking.     The  protocol  contained  the  following  under- 
taking : 

In  consideration  of  this  loan  the  Chinese  Government  declares 
its  resolution  not  to  grant  to  any  foreign  Power  any  right  or  privi- 
lege under  any  name  whatsoever  concerning  the  supervision  or 
administration  of  any  of  the  revenues  of  the  Chinese  Empire.  But 
in  case  the  Chinese  Government  should  grant  to  any  one  Power 
rights  of  this  character,  it  is  understood  that  from  the  mere  fact 
of  their  being  so  granted,  they  should  be  extended  to  the  Russian 
Government. 

The  declarations  were  stated  to  have  the  same  force 
and  value  as  a  treaty. 

Of  this  loan,  £8,350,553  was  outstanding  on  December 
31,  1918.8 

Anglo-German  Loan  of  1896.  In  1896,  by  a  contract 
signed  on  March  23,»  China  borrowed  £16,000,000  from 
an  Anglo-German  syndicate  composed  of  the  Hongkong 
and  Shanghai  Banking  Corporation  and  the  Deutsch- 
Asiatische  Bank.  This  loan  was  to  bear  five  per  cent, 
interest,  to  be  issued  at  98%  and  99,  the  Chinese  to  secure 
94,  the  term  to  be  thirty-six  years,  redemption  to  be  made, 
however,  by  yearly  sinking-fund  payments,  and  the  entire 
loan  **  subject  to  previous  loans  charged  on  the  same 
security  and  not  yet  redeemed,"  to  be  a  lien  upon  the 
Imperial  Maritime  Customs  and  to  have  priority  both  as 
to  principal  and  interest  over  all  future  loans,  charges, 
and  mortgages  so  long  as  the  loan  or  any  part  of  it  should 
be  unredeemed.  '*No  loan,  charge  or  mortgage,"  the 
agreement  ran,  **  shall  be  raised  or  created  which  shall 

•  China  Tear  Book,  1919,  p.  361. 

•For  text,  see  MacMurray,  No.  1896/2. 


CHINA'S  FOEEIGN  DEBTS  491 

take  precedence  of  or  be  on  equality  with  this  loan  or 
which  shall  in  any  manner  lessen  or  impair  its  security 
over  the  said  Customs  Revenue  so  far  as  required  for  the 
annual  services  of  this  loan  and  any  future  loan  charge  or 
mortgage  charged  on  the  said  customs  revenue  shall  be 
made  subject  to  this  loan  and  it  shall  be  so  expressed  in 
every  agreement  for  any  such  future  loan  charge  or  mort- 
gage. In  the  event  of  the  Imperial  Maritime  Customs 
Revenue  of  China,  at  any  time  proving  insufficient  to  sup- 
port the  service  of  the  interest  or  repayment  of  the  prin- 
cipal of  this  loan  the  Imperial  Chinese  Government  will 
provide  the  funds  required  for  the  same  from  other 
sources.  The  administration  of  the  Imperial  Maritime 
Customs  of  China  shall  continue  as  at  present  constituted 
during  the  curency  of  this  loan." 

A  schedule  of  interest  and  sinking  fund  payments  was 
attached  to  the  loan  agreement. 

Of  this  loan  there  was  outstanding  and  unpaid  on 
December  31,  1918,  £9,571,500.i<> 

Anglo-German  Loan  of  1898.  In  1898  (March  1)  China 
was  compelled  again  to  make  a  foreign  loan  ^^  in  order 
to  meet  her  obligations  to  Japan  under  the  indemnity 
provisions  of  the  treaty  of  Shimonoseki.  This  loan,  like 
its  predecessor,  was  obtained  from  the  Hongkong  and 
Shanghai  Banking  Corporation  and  the  Deutsch-Asia- 
tische  Bank.  Its  principal  was  £16,000,000,  with  an  inter- 
est rate  of  4i/^  per  cent.,  issue  price  of  90,  yielding  83  to 
the  Chinese,  was  to  run  for  forty-five  years,  and  to 
constitute  a  charge  on  the  Maritime  Customs,  subject  to 

»  China  Year  Book,  1919,  p.  351. 

**  For  the  text  of  the  loan  contract,  see  MacMurray,  No.  1898/3. 


492      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

previous  charges  thereon.  In  addition,  the  loan  was  to 
constitute  a  first  charge,  free  from  all  incumbrances, 
upon  the  general  likin  tax  of  Soochow,  Hung  Hu,  Kiuki- 
ang  and  Eastern  Chekiang,  and  the  Salt  Likin  of  Ichang, 
Hupeh,  and  Anhui.  The  loan  agreement  expressly  pro- 
vided that  the  entire  loan,  principal  and  interest,  should 
have  priority  over  all  future  loans,  charges,  or  mortgages 
that  might  be  charged  upon  these  likin  revenues,  and 
that  the  administration  of  the  Chinese  Imperial  Customs 
should  not  be  changed  during  the  currency  of  the  loan. 
In  order  that  still  greater  security  might  be  provided,  the 
agreement  provided : 

In  the  event  of  the  Customs  and  Likin  revenues  specified  and 
pledged  by  this  clause  being  at  any  future  time  insufficient  for  tha 
service  of  principal  and  interest  of  this  loan,  either  owing  to  depre- 
ciation of  silver,  diminution  of  revenue  or  any  other  cause  the 
Chinese  Imiperial  Government  hereby  engage  to  appropriate,  and 
forthwith  place  under  the  control  of  the  Inspector  General  of 
Maritime  Customs,  further  revenues  sufficient  to  complete  the 
amount  required. 

In  the  event  of  the  Chinese  Government,  during  the  currency  of 
this  loan,  entering  upon  negotiations  for  a  revision  of  Customs 
tariff  accompanied  by  stipulations  for  decrease  or  abolition  of 
Likin,  it  is  hereby  agreed,  on  the  one  hand,  that  such  revision  shall 
not  be  barred  by  the  fact  that  this  loan  is  secured  by  Likin,  and,  on 
the  other  hand,  that  whatever  Likin  is  pledged  for  the  service  of 
this  loan  shall  neither  be  decreased  nor  abohshed  except  by  arrange- 
ment with  the  Banks  and  then  only  upon  the  increase  of  Customs 
revenue  consequent  on  such  revision. 

The  amount  of  this  loan,  outstanding  on  December  31, 
1918,  was  £12,385,000." 

"  China  Tear  Book,  1919,  p.  351. 


CHINA'S  FOREIGN  DEBTS  493 

Boxer  Indemnities.  As  a  result  of  the  outrages  com- 
mitted in  1900  by  the  Boxers,  more  or  less  aided  or  sanc- 
tioned by  the  Imperial  Chinese  Government  itself,  indem- 
nities to  the  Treaty  Powers  amounting  to  £67,500,000 
(450,000,000  Haikwan  taels)  were  levied  by  the  final 
protocol  of  1901  against  China.  This  total  was  divided 
into  five  sums,  bearing  interest  at  4  per  cent.,  and  made 
payable  in  instalments  covering  a  period  of  thirty-nine 
years.^^ 

As  security  for  the  payment  by  China  of  these  indem- 
nity payments  the  following  revenues  of  the  Chinese  Gov- 
ernment were  assigned: 

1.  The  balance  of  the  revenues  of  the  Imperial  Maritime  Cus- 
tomis  after  payment  of  the  interest  and  amortization  of  preceding 
loans  secured  on  these  revenues,  plus  the  proceeds  of  the  raising  to 
five  per  cent,  effective  of  the  present  tariff  on  maritime  imports, 
including  articles  until  now  on  the  free  list,  but  exempting  foreign 
rice,  cereals,  and  flour,  gold  and  silver  bulHon  and  coin. 

2.  The  revenues  of  the  native  customs,  administered  in  the  open 
ports  by  the  Imperial  Maritime  Customs. 

"Schedules  were  attached  to  the  Final  Protocol  of  1901,  for  which  see 
MacMurray,  No.  1901/3.  At  the  time  China  declared  war  on  Grcnnany 
and  Austria-Hungary  she  of  course  suspended  all  payments  on  the 
amounts  due  those  countries,  and  by  the  treaties  of  peace  which  have  been 
drawn  up,  those  countries  surrender  to  China  all  further  claims  to  their 
indemnities.  China  has  signed  the  draft  treaty  of  peace  with  Austria  but 
not  with  Germany. 

A  loan  of  £1,000,000  for  "  Exchange  Adjustment  of  Indemnity "  was 
obtained  from  the  Hongkong  and  Shanghai  Banking  Corporation  and  the 
Deutsch-Asiatische  Bank  in  1905,  but  this  loan  has  since  been  repaid. 

The  apportionment  of  the  total  indemnity  among  the  several  Powers  was 
arranged  by  the  Protocol  of  June  14,  1902,  printed  in  MacMurray,  note  to 
No.  1901/3. 

By  a  Joint  Resolution  of  May  25,  1908,  the  United  States  released  China 
from  the  payment  of  a  considerable  part  of  the  indemnity  due  to  the 
United  States  under  the  Protocol  of  1901.  For  details  as  to  this  see 
MacMurray,  note  to  No.  1901/3. 


494      FOEEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

3.  The  total  revenues  of  the  Salt  Gabelle,  exclusive  of  the  frac- 
tion previously  set  aside  for  other  foreign  loans. 

General  Governmental  and  Administrative  Reorganiza- 
tion Loans.  Not  until  about  the  time  of  the  establishment 
of  the  Eepublic  did  China  find  herself  compelled  to  make 
foreign  loans  for  the  purpose  of  meeting  her  ordinary 
running  expenses  or  for  effecting  a  reorganization  of  her 
administrative  services  and  the  reform  of  her  currency.** 

Currency  Loan  of  1911.  In  1911,  by  an  agreement 
entered  into  April  15,  between  the  Chinese  Ministry  of 
Finance  and  certain  American,  British,  German,  and 
French  banking  interests,  a  five  per  cent,  sinking  fund 
gold  loan  for  £10,000,000,  was  contracted  for.*"* 

Of  the  proceeds  expected  to  be  derived  from  this  loan, 
£8,500,000  was  to  be  devoted  to  reforming  China's  cur- 
rency. 

Owing  to  the  outbreak,  near  the  close  of  the  year,  of  the 
Revolution,  this  loan  was  never  actually  floated,*®  but  the 
loan  agreement  itself  has  been  continued  in  force,  for 
periods  of  six  months  each,  by  successive  agreements,  as 
provided  for  in  Article  XVII  of  the  agreement.**^ 

**  It  is,  however,  to  be  noted  that  many  of  the  loans  made  by  China  dur- 
ing the  last  few  years,  and  especially  those  obtained  from  Japan,  though 
nominally  for  the  construction  of  railways  or  other  public  enterprises, 
have,  in  fact,  been  made  to  secure  funds  for  meeting  current  governmental 
expenses,  and  the  proceeds  have  been  spent  without  any  construction  work 
being  even  attempted. 

"The  banks  represented  in  this  agreement  were  the  following:  J.  P. 
Morgan  &  Co.,  Kuhn,  Loeb  &  Co.,  the  First  National  and  the  National  City 
Bank,  all  of  New  York  City;  the  Hongkong  and  Shanghai  Banking  Cor- 
poration ;  the  Deutsche-Asiatische  Bank ;  the  Banque  de  I'lndo-Chine.  For 
the  text  of  the  loan  contract,  see  MacMurray,  No.  1911/2. 

••  £400,000  was  advanced  under  the  agreement  for  plague  relief  and 
industrial  expenses  in  Manchuria. 

"  Article  XVII  provided  that  extensions  for  a  reasonable  time  might  be 


CHINA'S  FOREIGN  DEBTS  495 

The  agreement  provided  that  the  sums  to  be  loaned 
should  be  made  a  first  charge  on  the  following  revenues : 

''(a)  Duties  on  tobacco  and  spirits  in  the  three  Man- 
churian  provinces,  amounting  to  one  million  Kuping  taels 
per  annum. 

"(6)  Production  tax  in  the  three  Manchurian  prov- 
inces, amounting  to  seven  hundred  thousand  Kuping  taels 
per  annum. 

'*((?)  Consumption  tax  in  the  three  Manchurian  prov- 
inces, amounting  to  eight  hundred  thousand  Kuping  taels 
per  annum. 

**{d)  Newly  added  surtax  upon  salt  of  all  the  provinces 
of  China  (authorized  by  imperial  edict  in  the  fifth  moon 
of  the  thirty-fourth  year  of  His  Imperial  Majesty 
Kuang  Hsu),  amounting  to  two  million  five  hundred 
thousand  Kuping  taels." 

asked  for  by  the  banks,  and  that,  if  the  Chinese  Government  should  refuse 
to  grant  such  extension,  the  contract  should  become  null  and  void  "  sub- 
ject always  to  the  repayment  of  advances."  The  loan  agreement  has 
several  times  been  extended  for  periods  of  six  months,  the  last  of  such 
extensions  being  in  October,  1919. 

On  October  20,  1917  the  American  Legation  at  Peking  commimicated 
to  the  Chinese  Government  the  following  note  in  which  it  reserved  its 
rights  and  interests  in  the  Currency  Loan  notwithstanding  the  fact  that 
the  American  Group  of  banks  had  withdrawn  in  1913,  from  the  Inter- 
national Consortium  (see  post,  p.  500). 

"  Quite  apart  from  any  individual  contractual  interest  accruing  to  *  The 
American  Group '  \mder  the  Currency  Loan  Agreement  of  April  15,  1911, 
the  Government  of  the  United  States  considers  that  the  whole  history  of 
the  currency  loan  project — ^notably  the  appeal  made  to  it  by  the  Chinese 
Government  in  January,  1904,  the  conferences  with  Dr.  Jenks  in  1903 
and  1904,  and  the  request  for  a  loan  for  the  purpose  of  monetary  reform 
which  in  1910  the  Chinese  Government  addressed  not  to  any  individuals 
but  directly  to  the  American  Government — constitutes  in  behalf  of  the 
Government  of  the  United  States  such  an  interest  in  the  project  as 
entitles  it  to  be  considered  in  reference  to  any  action  which  the  Chinese 
Government  may  contemplate  with  a  view  to  carrying  that  project  into 
effect.  This  interest  has  never  been  abandoned  by  the  Government  of  the 
United  States."    ((MacMurray,  note  to  No.  1911/2). 


496      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

These  provincial  revenues  were  declared  to  be  free 
from  all  other  loans,  liens,  charges  or  mortgages. 

The  loan  agreement  also  provided  that  should  the 
revenues  which  have  been  mentioned  prove  insufficient 
to  meet  interest  or  repayments  of  the  principal,  the 
Chinese  Government  would,  first  from  the  Manchurian, 
and  then,  if  necessary,  from  other  sources,  supply  the 
balance  required  to  meet  such  payments.  Also,  that  so 
long  as  the  loan  might  remain  unpaid,  there  should  be  no 
interference  with  the  pledged  revenues ;  and  that  if  there 
should  be  any  default  in  any  of  the  payments  when  due, 
the  pledged  revenue  should  forthwith  be  transferred  to, 
and  administered  by,  the  Imperial  Maritime  Customs  for 
the  account  of  and  in  the  interest  of  the  holders  of  the 
bonds  representing  the  loan. 

Other  clauses  of  the  agreement  provided  that  the  loan, 
interest  and  principal,  should  always  have  priority  of 
lien  on  the  revenues  specified ;  and  that  in  the  event  of  a 
revision  of  the  customs  tariff,  accompanied  by  stipula- 
tions for  the  abolition  of  Li  kin,  the  revenues  required  for 
security  of  the  loan  should  not  be  abolished  or  diminished 
except  by  a  previous  arrangement  with  the  banks,  and 
then  only  so  far  as  an  equivalent  satisfactory  to  the  banks 
should  be  substituted  in  the  shape  of  a  first  lien  on  the 
other  revenues  consequent  upon  such  tariff  revision. 

The  proceeds  of  the  loan  were  to  be  kept  in  banks  desig- 
nated by  the  banks  signatory  to  the  agreement;  they 
were  to  constitute  separate  funds  to  be  known  as  **  The 
Chinese  Government  Currency  Reform  Account  '*  and 
**  The  Chinese  Government  Manchurian  Development 
Account, ' '  and  payments  therefrom  were  to  be  made  only 
in  conformity  with  the  Chinese  Government's  require- 


CHINA'S  FOREIGN  DEBTS  497 

ments  as  specified  in  statements  submitted  by  the  Chinese 
Government,  which  Government  was  also  to  submit  quar- 
terly reports  showing  the  disbursements  incident  to  the 
inauguration  and  operation  of  the  program  of  currency 
reform  and  the  development  of  Manchurian  industry. 
These  conditions  are  of  interest  as  showing  at  least  an 
effort  upon  the  part  of  the  lending  interests  to  keep  in- 
formed as  to  whether  or  not  the  sums  advanced  by  them 
were  being  actually  expended  by  the  Chinese  authorities 
for  the  purposes  for  which  they  were  ostensibly  borrowed. 
Article  XVI  of  the  loan  agreement  is  of  special  interest 
since  it  granted  to  the  signatory  banks  an  option  upon 
future  foreign  loans  relating  to  the  same  matters.  This 
article  read: 

If  the  Imperial  Government  should  desire  to  obtain  from  other 
than  Chinese  sources,  funds  in  addition  to  the  proceeds  derived 
from  this  loan,  to  continue  or  complete  the  operations  contemplated 
under  this  agreement,  the  Imperial  Chinese  Government  shall  first 
invite  the  [signatory]  banks  to  undertake  a  loan  to  provide  the 
funds  required,  but  should  the  Imperial  Chinese  Government  fail 
to  agree  with  the  banks  as  to  the  terms  of  such  supplementary  loan 
then  other  financial  groups  may  be  invited  to  undertake  the  same ; 
and  should  the  Imperial  Chinese  Government  decide  to  invite  for- 
eign capitalists  to  participate  with  Chinese  interests  in  Manchurian 
business  contemplated  under  this  loan,  or  to  be  undertaken  in  con- 
nection therewith,  the  banks  shall  first  be  invited  to  so  participate. 

Crisp  Loan  of  1912.  After  the  establishment  of  the 
Eepublic  the  financial  necessities  of  the  new  Government 
at  Peking  became  very  urgent  and  negotiations,  presently 
to  be  described,  were  entered  into  with  a  group  of  British, 
French,  German  and  American  banks — the  so-called 
Quadruple  Group — for  a  considerable  loan.    While  these 

32 


498      FOEEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

negotiations  were  pending,  China  entered  into  an  agree- 
ment ^®  with  the  London  firm  of  C.  Birch  Crisp  &  Co.  for 
a  loan  of  £10,000,000,  as  security  for  which  the  salt 
revenues,  subject  to  prior  charges,  were  pledged,  but  with 
no  control  over  Chinese  financial  administration  except 
that,  in  case  there  was  a  default  of  payments  due,  the  salt 
administration  should  be  placed  under  the  control  of  the 
Maritime  Customs  to  the  extent  that  might  be  necessary 
to  meet  the  obligations  accruing  under  the  loan.  The 
purposes  of  the  loan  were  declared  to  be  ' '  to  provide 
capital  for  the  repayment  of  existing  loans  and  for  the 
reorganization  of  the  Government  and  for  productive 
works.'* 

An  interesting  feature  regarding  this  loan  was  that  it 
represented  an  attempt  upon  the  part  of  a  British  bank- 
ing concern  to  float  a  Chinese  loan  without  the  affirmative 
approval  and  co-operafion  of  the  British  Government 
which  was  then  giving  its  support  to  the  British  banks 
included  in  the  Quadruple  Group.  The  result  showed 
that  this  was  not  practicable,  for  but  forty  per  cent,  of 
the  £5,000,000  of  the  loan  offered  in  London  was  sub- 
scribed for  by  the  public. 

It  may  also  be  noted  that  it  was  claimed  by  the  inter- 
national **  Consortium"  of  banks  with  which,  as  has 
been  said,  the  Chinese  Government  was  then  negotiating, 
that  the  entering  into  this  agreement  with  Crisp  &  Co. 
was  in  violation  of  the  undertaking  on  the  part  of  the 
Chinese  Government  that  it  would  deal  only  with  the 
Consortium.    The  Chinese  Government,  however,  replied 

**For  the  text  of  this  contract,  see  MacMurray,  No.  1912/9;  for  the 
agreement  cancelling  the  contract  save  as  to  the  £5,000,000  actually  issued, 
see  idem.,  footnote  to  No.  1913/5. 


CHINA'S  FOEEIGN  DEBTS  499 

that,  at  that  time,  the  Consortmm  had  not  been  willing 
to  meet  the  wishes  of  the  Chinese  Government  and  that, 
therefore,  it  was  at  liberty  to  look  elsewhere  for  funds. 
In  result,  however,  the  loan  contract  was  cancelled  except 
as  to  the  amount  that  had  been  already  advanced.  Thus 
the  second  instalment  of  £5,000,000  of  the  Crisp  loan  has 
never  been  issued,  and  the  amount  of  the  loan  now  out- 
standing is  £5,000,000. 

The  Six  Power  Consortium.  After  the  conclusion  of 
the  Currency  Loan  of  1911  by  the  British,  French,  Ger- 
man, and  American  banking  interests,  the  Russian  and 
Japanese  Governments  asked  that  their  respective  bank- 
ing interests  be  allowed  to  co-operate  in  future  general 
loans  to  China.  This  was  agreed  to  and  on  June  18, 1912, 
a  formal  agreement  was  entered  into  between  the  follow- 
ing banks :  the  Hongkong  and  Shanghai  Banking  Corpo- 
ration, the  Deutsch-Asiatische  Bank,  the  Banque  de 
I'Indo  Chine,  J.  P.  Morgan  &  Co.,  Kuhn,  Loeb  &  Co.,  the 
First  National  Bank  and  the  National  City  Bank  (these 
four  last-named  constituting  the  **  American  group"), 
the  Russo-Asiatic  Bank,  and  the  Yokohama  Specie 
Bank." 

By  this  agreement  these  six  foreign  banks  or  groups 
of  banks,  acting  not  only  for  themselves  but  for  syndi- 
cates of  financial  interests  in  their  respective  countries, 
agreed  that  they  would  participate  equally  and  upon 
equal  terms  with  regard  to  the  proposed  Reorganization 
Loan  or  any  other  future  administrative,  as  distinguished 
from  industrial,  loans  or  advances  which  might  be  made 

"For  the  text  of  this  Inter-Bank  Agreement,  see  MacMurray,  note  to 
No.  1913/5, 


500      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

to  the  Chinese  Government  or  to  any  of  its  provinces  or 
to  companies  having  Chinese  Government  or  provincial 
buarantees,  with  the  proviso  that  this  should  not  be 
construed  to  include  current  banking  business  and  small 
financial  operations,  nor  loans  that  did  not  involve  the 
issuance  to  the  public  of.  bonds  or  other  securities.  Should 
one  or  more  of  the  parties  decline  to  participate  in  a 
proposed  loan,  the  other  parties  should  be  free  to  under- 
take the  loan  upon  their  part  but  the  bonds  should  be 
issued  only  in  their  respective  markets.  Russia  and 
Japan,  however,  obtained  the  entrance  upon  the  minutes 
of  the  meeting  of  the  banks  of  the  following  reservations : 

In  the  event  of  the  Russian  and  or  Japanese  Groups  disapproving 
of  any  object  for  which  any  advance  or  loan  under  the  agreement 
shall  be  intended  to  be  made,  then,  if  such  advance  or  loan  shall  be 
concluded  by  the  other  groups  or  any  of  them  and  the  Russian 
Government  or  the  Japanese  Government  shall  notify  the  other 
Governments  concerned  that  the  business  proposed  is  contrary  to 
the  interests  of  Russia  or  Japan  as  the  case  mjay  be,  the  Russian 
Group  or  the  Japanese  Group  as  the  case  may  be  shall  be  entitled 
to  withdraw  from  the  agreement,  but  the  retiring  group  will  remain 
bound  by  all  financial  engagements  which  it  shall  have  entered  into 
prior  to  such  withdrawal.  The  withdrawal  of  the  Russian  or 
Japanese  Group  shall  not  affect  the  rights  or  liabilities  of  the  other 
Groups  under  the  Agreement. 

It  was  understood  that  this  reservation  had  reference 
to  the  "special  interests"  which  Japan  and  Russia 
claimed  in  North  China,  Manchuria  and  Mongolia. 

Withdrawal  of  American  Banks  from  the  Consortium. 

In  1913  the  American  banks  withdrew  from  the  consor- 
tium in  consequence  of  the  following  announcement,  made 
on  March  18, 1913,  by  President  Wilson: 


CHINA'S  FOEEIGN  DEBTS  501 

We  are  informed  that  at  the  request  of  the  last  Administration  a 
certain  group  of  American  bankers  undertook  to  participate  in  the 
loan  now  desired  by  the  Government  of  China  (approximately 
$125,000,000).  Our  Government  wished  American  bankers  to  par- 
ticipate along  with  the  bankers  of  other  nations  because  it  desired 
that  the  good-will  of  the  United  States  should  be  exhibited  in  this 
practical  way,  that  American  capital  should  have  access  to  that 
great  country,  and  that  the  United  States  should  be  in  a  position 
to  share  with  the  other  Powers  any  political  responsibilities  that 
might  be  associated  with  the  developmjent  of  the  foreign  relations 
of  China  in  connection  with  her  industrial  and  commercial  enter- 
prises. The  present  Administration  has  been  asked  by  this  group 
of  bankers  whether  it  would  also  request  them  to  participate  in  the 
loan.  The  representatives  of  the  bankers  through  whom  the 
Administration  was  approached  declared  that  they  would  continue 
to  seek  their  share  of  the  loan  under  the  proposed  agreements  only 
if  expressly  requested  to  do  so  by  the  Government.  The  Adminis- 
tration has  declined  to  make  such  request,  because  it  did  not 
approve  the  conditions  of  the  loan  or  the  implications  of  respon- 
sibility on  its  own  part,  which  it  was  plainly  told  would  be  involved 
in  the  request. 

The  conditions  of  the  loan  seem  to  us  to  touch  very  nearly  the 
administrative  independence  of  China  itself,  and  this  Adminis- 
tration does  not  feel  that  it  ought,  even  by  in^plication,  to  be  a 
party  to  those  conditions.  The  responsibility  on  its  part  which 
would  be  implied  in  requesting  the  bankers  to  undertake  the  loan 
might  conceivably  go  to  the  length  in  some  unhappy  contingency 
of  forcible  interference  in  the  financial,  and  even  the  political, 
affairs  of  that  great  Oriental  State,  just  now  awakening  to  a  con- 
sciousness of  its  power  and  of  its  obligations  to  its  people.  The 
conditions  include  not  only  the  pledging  of  particular  taxes,  some 
of  them  antiquated  and  burdensome,  to  secure  the  loan  but  also  the 
administration  of  those  taxes  by  foreign  agents.  The  responsibility 
on  the  part  of  our  Government  implied  in  the  encouragement  of  a 
loan  thus  secured  and  administered  is  plain  enough  and  is  obnox- 
ious to  the  principles  upon  which  the  Government  of  our  people 
rests. 


502      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  Government  of  the  United  States  is  not  only  willing  but 
earnestly  desirous,  of  aiding  the  great  Chinese  people  in  every  way 
that  is  consistent  with  their  untrammeled  developm)ent  and  its  own 
immemorial  principles.  The  awakening  of  the  people  of  China 
to  a  consciousness  of  their  responsibilities  under  free  Government 
is  the  most  significant,  if  not  the  most  momentous,  event  of  our 
generation.  With  this  movement  and  aspiration  the  American 
people  are  in  profound  sympathy.  They  certainly  wish  to  par- 
ticipate and  participate  very  generously  in  the  opening  to  the 
Chinese  and  to  the  use  of  the  world  of  the  almost  untouched  and 
perhaps  unrivaled  resources  of  China. 

The  Government  of  the  United  States  is  earnestly  desirous  of 
promoting  the  most  extended  and  intimate  trade  relationship  be- 
tween this  country  and  the  Chinese  Republic.  The  present  Admin- 
istration will  urge  and  support  the  legislative  measures  necessary 
to  give  American  merchants,  manufacturers,  contractors  and  engi- 
neers the  banking  and  other  financial  facilities  which  they  now  lack 
and  without  which  they  are  at  a  serious  disadvantage  as  compared 
with  their  industrial  and  commercial  rivals.  This  is  its  duty. 
This  is  the  main  material  interest  of  its  citizens  in  the  development 
of  China.  Our  interests  are  those  of  the  Open  Door — a  door  of 
friendship  and  mtitual  advantage.  This  is  the  only  door  we  care 
to  enter. 

With  the  outbreak  of  the  Great  War  German  banking 
interests  ceased  to  figure  in  the  consortium;  and,  since 
the  downfall  of  the  Czar's  government,  Eussian  interests 
have  also  played  no  part.  This  left  in  the  consortium 
only  the  British,  French  and  Japanese  interests.  The 
attempt  upon  the  part  of  the  United  States  to  establish  a 
new  consortium  will  be  described  later  on  in  this  chapter. 

The  Reorganization  Loan  of  1913.  Early  in  1912  the 
new  Republican  Government,  through  its  representative 
Tang  Shao-Yi,  approached  the  Consortium  with  a  view 
to  obtaining  a  loan  of  £60,000,000  for  the  reorganization 


CHINA'S  FOREIGN  DEBTS  503 

of  China  *s  demoralized  administrative  services.  This 
project  was  sympathetically  received  by  the  Consortium, 
and,  pending  a  definite  and  final  agreement  as  to  the  terms 
upon  which  the  loan  should  be  issued,  an  advance  of  taels 
2,000,000  was  made  to  meet  the  urgent  needs  of  the 
Republican  Government,  then  at  Nanking.  The  final 
agreement  with  the  five  national  banking  interests — 
America  having  withdrawn,  as  has  been  said — ^was  signed 
on  April  26,  1913.2<>  The  significant  provisions  of  this 
important  loan  agreement  were  as  follows: 

The  loan  was  to  be  £25,000,000  and  to  be  entitled  *'  The 
Chinese  Government  Five  Per  Cent.  Reorganization  Gold 
Loan.'* 

The  net  proceeds  were  to  be  used  solely  for  the  follow- 
ing purposes : 

(a)  Payment  of  indemnities  due  by  the  Chinese  Gov- 
ernment— a  list  of  these  being  appended  to  the  agree- 
ment. 

(b)  Redemption  in  full  of  outstanding  provincial 
loans — a  list  of  these  being  appended  to  the  agreement. 

(c)  Payment  at  due  date  of  certain  other  shortly 
maturing  liabilities  of  the  Chinese  Government  as  shown 
in  an  appended  list,  including  provision  for  foreign 
claims  for  damages  and  losses  arising  out  of  the  Revolu- 
tion. 

(d)  Disbandment  of  troops  as  detailed  in  an  annex  to 
the  agreement. 

(e)  Current  expenses  of  administration  as  estimated 
in  an  annex  to  the  agreement. 

(/)  Reorganization  of  the  Salt  Administration,  as  set 
forth  in  an  annex. 

"MacMurray,  No.  1913/5. 


504      FOREIGX  RIGHTS  AND  INTERESTS  IN  CHINA 

(g)  Snch  other  administrative  purposes  as  might  be 
mutually  agreed  upon  between  the  banks  and  the  Chinese 
Government. 

The  entire  loan  was  made  a  direct  liability  of  the 
Chinese  Government,  and  was  secured  as  to  both  prin- 
cipal and  interest,  *'by  a  charge  upon  the  entire  revenues 
of  the  Salt  Administration  of  China  '  *  subject  to  previous 
charges  thereon.  There  was  also  the  provision  that  if, 
at  any  future  time,  the  revenues  of  the  Maritime  Customs 
should  exceed  the  amounts  necessary  to  provide  the 
charges  upon  them,  the  surplus  should  be  applied  in  the 
first  instancfe  to  the  security  and  service  of  the  Reorgani- 
zation Loan,  the  surplus  of  the  salt  revenue  being  thereby 
pro  tanto  increased  and  made  available  for  the  general 
purposes  of  the  Chinese  Government. 

The  Chinese  Government  undertook  **  to  take  imme- 
date  steps  for  the  reorganization  with  the  assistance  of 
foreigners  of  the  system  of  collection  of  the  salt  revenues 
of  China  assigned  as  security  for  this  loan,  according  to 
a  general  plan  which  the  loan  agreement  outlined.  This 
included  the  establishment  at  Peking  of  a  Central  Salt 
Administration,  under  the  control  of  the  Minister  of 
Finance,  but  administered  by  a  Chinese  chief  inspector, 
who  was  to  constitute  the  chief  authority  for  the  superin- 
tendence of  the  issue  of  licenses  and  the  compilation  of 
reports  and  returns  of  revenue.  Revenues  from  salt 
dues  were  to  be  lodged  with  the  banks  or  with  depositors 
approved  by  them  and  placed  to  the  Chinese  Government 
Salt  Revenue  Account,  which  account  was  not  to  be  drawn 
upon  except  under  the  joint  signatures  of  the  Chief 
Inspectors,  whose  duty,  it  was  declared,  should  be  to 
protect  the  priority  of  the  several  obligations  secured 


CHINA'S  FOREIGN  DEBTS  505 

upon  the  salt  revenues.  Unless  and  until  there  should 
be  default  in  the  payments  called  for  by  the  loan,  the 
Salt  Administration  was  not  to  be  interfered  with,  but 
if  default  occurred  the  administration  was  to  be  forth- 
with incorporated  with  the  Maritime  Customs  and  admin- 
istered for  the  benefit  of  the  bondholders  representing 
the  Reorganization  Loan.  By  regulations  issued  for  the 
administration  of  the  salt  revenue,^!  the  foreign  Asso- 
ciate Chief  Inspector  was  designated  as  "  Advisor  of  the 
Central  Salt  Administration, ' '  and  his  duties  and  author- 
ity defined. 

The  term  of  the  loan  was  fixed  at  forty-seven  years, 
repayments  to  begin,  however,  with  the  eleventh  year 
according  to  a  sinking  fund  arrangement.  The  issue 
price  of  the  loan  was  to  be  in  London  not  less  than  90%, 
and  to  secure  to  China  a  net  price  of  not  less  than  84%. 

By  Article  XVII  the  following  option  upon  future  loans 
was  given  to  the  Consortium: 

In  the  event  of  the  Chinese  Government  desiring  to  issue  further 
loans  secured  upon  the  revenues  of  the  Salt  Administration  or  to 
issue  supplementary  loans  for  purposes  of  the  nature  of  those 
specified  in  Article  II  of  this  Agreement,  the  Chinese  Government 
will  give  to  the  [signatory]  Banks  the  option  of  undertaking  such 
loans  on  a  commission  basis  of  six  per  cent.  (6%)  of  the  nominal 
value  of  the  bonds  as  provided  for  in  Article  XIII  of  this  Agree- 
ment." 

"For  text  of  these,  see  MacMurray,  note  to  No.  1913/5.  The  very 
valuable  work  of  Sir  Richard  Dane  in  connection  with  the  re -organization 
and  administration  of  the  Salt  Gabelle  should  be  noted. 

"With  reference  to  this  Reorganization  Loan  it  is  to  be  noted  that 
according  to  its  conditions  a  very  considerable  part  of  its  proceeds  did  not 
actually  become  available  for  expenditure  by  the  Chinese  Government, 
being  devoted  to  the  payment  of  Provincial  Loans,  shortly  maturing  obli- 
gations of  the  Central  Government,  previous  advances  by  the  banks,  etc., 
AS  detailed  in  the  Annexes  to  the  Agreement. 


606      FOKEIGN  EIGHTS  AND  INTEEESTS  IN  CHINA 

The  first  instalment  paid  under  the  Reorganization 
Loan  agreement  amounted  to  £25,000,000,  and  this  is  the 
amount  now  outstanding. 

Japanese  Advances  on  Reorganization  Loan.  In  1917 
and  1918  the  Yokohama  Specie  Bank  advanced  a  total  of 
yen  30,000,000,  in  three  instalments  to  the  Chinese  Gov- 
ernment, which  advances  are  sometimes  spoken  of  as 
the  Second  Reorganization  Loan.  They  are  secured  on 
revenues  of  the  Salt  Administration,  and  are  to  be 
redeemed  out  of  a  second  Reorganization  Loan  by  the 
Consortium  if,  and  when,  made.  Otherwise,  the  loans  are 
to  be  deemed  Japanese  loans.^^ 

Belgian  Loan  of  1912.  While  the  reorganization  Loan 
of  1913  was  being  negotiated  with  the  Four  Power 
Banks  ^*  the  Chinese  Government  obtained  a  loan^^  of 
£1,000,000  from  the  Banque  Sino-Belge,  which  bank  was 
given  an  option  for  further  loans  amounting  in  all  to 
£10,000,000.  Back  of  the  signatory  bank  was  a  syndicate 
composed  of  Russian,  French,  Belgian  and  British  inter- 
ests. The  loan  was  declared  to  be  **  for  the  payment  of 
such  expenses  as  will  be  deemed  necessary  to  consolidate 
the  central  and  local  governments,  to  assure  the  satisf  ac- 

It  may  also  be  observed  that  the  signing  of  this  Agreement  by  the  Gov- 
ernment of  Yuan  Shih-Kai,  without  the  approval  of  the  Parliament  then 
sitting  at  Peking,  caused  vehement  protests  upon  the  part  of  those  Repub- 
lican leaders  who  were  opposed  to  Yuan  and  fearful  of  the  means  thus 
placed  at  his  disposal  for  consolidating  his  power.  It  will  be  remembered 
that  it  was  very  shortly  after  this  that  there  broke  out  in  the  South  the 
short-lived  so-called  Second  Revolution  against  Yuan. 

"MacMurray,  Nos.  1917/8  and  1918/1. 

•*  Russia  and  Japan  at  that  time  had  not  been  admitted  to  the  Con- 
flortium,  and  America  had  not  then  withdrawn. 

"For  the  text  of  this  loan  contract,  see  MacMurray,  No.  1912/4. 


CHINA'S  FOEEIGN  DEBTS  507 

tory  admmistration  of  the  State  and  province  and/or  to 
relieve  the  distress  prevailing  among  the  people  and  in 
commercial  circles. ' '  The  loan  was  declared  to  be  a  direct 
obligation  of  the  Central  Chinese  Government  and  as 
security  were  pledged  the  net  income  and  property  of 
the  Peking-Kalgan  Railway. 

This  loan  agreement,  which  was  signed  March  14, 1912, 
was  regarded  by  the  Consortium  as  in  violation  of  the 
undertaking  which  Tang  Shao-Yi,  the  representative  of 
the  Chinese  Government,  had  made  with  it,  and  a  protest 
against  carrying  out  the  agreement  was  filed  on  March  15. 

It  is  not  necessary  here  to  discuss  the  questions  of  good 
faith  thus  raised,  but  it  may  be  said  that  in  result  the 
agreement  was  cancelled  by  the  Chinese  government 
except  as  to  £250,000  that  had  already  been  advanced. 

Austrian  Loans  of  1912.  Hard  pressed  as  it  was  for 
funds,  the  Chinese  Eepublic  early  in  1913  contracted 
three  loans  of  £2,000,000  and  £1,200,000  and  £500,000, 
respectively,  from  a  group  of  Austrian  interests,  and  also 
three  loans  from  the  firm  of  Arnhold  Karberg  &  Co. 
representing  Austrian  and  German  financial  interests.^® 
These  loans,  nominally  to  obtain  war  material,  were 
actually  for  the  purpose  of  obtaining  funds  for  current 
expenses  of  the  Government  and  to  be  spent  at  its  dis- 
cretion. 

Loans  made  in  1914  from  the  Hongkong  and  Shanghai 
Banking  Corporation,  the  Chartered  Bank  of  India 
(British)  and  Arnhold,  Karberg  &  Co.  (Austrian),  aggre- 
gating £6,635,000,  have  been  redeemed  and  therefore  need 
not  be  further  considered. 

"For  summaries  of  the  provisions  of  these  loans,  see  MacMurray,  No. 
1913/4. 


508      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Lee,  Higginson  (American)  Loan  of  1916.  By  an  agree- 
ment dated  April  7,  1916,  the  American  banking  firm  of 
Lee,  Higginson  &  Co.,  of  Boston,  Massachusetts,  con- 
tracted a  loan  to  the  Chinese  Government  of  $5,000,000, 
payable  in  April,  1919.^^  The  loan  was  floated  in  the 
form  of  three-year  Chinese  treasury  gold  notes,  which 
notes  have  now  been  all  redeemed. 

Chicago  Bank  Loan.  By  an  agreement  dated  November 
16,  1916,2^  the  Continental  Trust  and  Savings  Bank  of 
Chicago,  Illinois,  contracted  to  loan  to  the  Government 
of  China  $5,000,000  which  the  Government  declared  was 
needed  **  for  industrial  purposes  including  the  internal 
development  of  China,  the  strengthening  of  the  reserves 
of  the  Bank  of  China  and  the  Bank  of  Communications 
(both  of  which  are  official  banks)  and  other  similar  pur- 
poses." The  loan  was  thus  placed  outside  of  the  scope 
of  the  option  held  by  the  member  banks  of  the  Consor- 
tium. 

As  security  for  the  loan  the  Chinese  Government 
pledged  *  *  the  entire  revenues  derived  and  to  be  derived 
by  the  Chinese  Government  from  the  Tobacco  and  Wine 
Public  Sales  Tax,"  this  security  being  declared  to  be 
**  free  from  any  other  loan,  pledge,  lien,  charge  or  mort- 
gage whatsoever." 

By  a  supplementary  agreement,  dated  May  14, 1917,  it 
was  provided  that  whereas  certain  claims  had  been  made 
by  other  parties  that  they  had  a  prior  lien  on  the  Tobacco 
and  "Wine  Public  Sales  Tax,  the  Chinese  Government, 

"  Text  in  MacMurray,  No.  1916/4. 

**  Texts  of  loan  contract  and  supplementary  agreement  in  MacMurray, 
No.  1916/13. 


CHINA'S  FOREIGN  DEBTS  509 

without  admitting  or  passing  upon  the  validity  of  such 
claim,  agreed  that  the  loan  of  the  Chicago  bank  should  be 
further  secured  by  a  direct  charge  on  *  *  the  Goods  tax 
receipts  from  the  Provinces  of  Honan,  Anhui,  Fukien, 
and  Shensi,  whether  such  receipts  be  in  the  nature  of 
Likin  taxes,  transportation  taxes  or  other  taxes  or  im- 
posts of  like  nature."  As  long  as  the  loan  should  remain 
unpaid,  these  taxes  were  to  remain  in  force  and  not  be 
diminished  or  repealed  or  released  without  the  consent 
of  the  bank.  Furthermore,  the  taxes  were  to  be  collected 
by  oflQcials  directly  commissioned  by  the  Peking  Govern- 
ment and  to  be  deposited,  when  collected,  in  depositaries 
selected  by  that  Government  and  subject  only  to  its 
orders. 

The  agreement  of  November  16, 1916,  gave  to  the  bank 
an  option  to  provide  the  money  in  case  the  Chinese  Gov- 
ernment should  thereafter  determine  to  borrow  in  the 
United  States  additional  sums  up  to  $25,000,000;  this 
option  to  endure  for  sixty  days  after  information  should 
be  given  to  the  bank  by  the  Chinese  Government  that 
a  loan  was  desired.  The  $5,000,000  originally  advanced 
has  been  repaid  from  proceeds  of  a  loan  contract  dated 
October  11,  1919. 

Japanese  Loans  of  1917-1919.  During  these  three  years 
Japanese  banking  interests  made  numerous  loans  to  the 
Chinese  Government  for  various  purposes  which  it  is 
not  feasible  to  describe  here  because  in  a  considerable 
number  of  instances  the  terms  of  the  loans  have  not  been 
made  public.  The  proceeds  of  many  of  these  loans,  osten- 
sibly made  for  industrial  purposes — railway  building, 
mining  exploitation,  forestry,  etc. — ^were  spent  by  the 


510      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

Peking  Government  to  carry  on  the  military  contest  it 
was  waging  with  the  Southern  Provinces.  The  fact  that 
the  loans,  or  many  of  them,  had  the  approval  of  the  Japa- 
nese Government  was  shown  by  the  publication  of  an 
official  report  in  which  was  described  the  manner  in  which 
the  Government  had  given  to  the  banks  additional  powers 
in  order  that  they  might  float  the  loans. 

There  was  a  very  general  feeling,  not  only  in  China  but 
in  foreign  capitals  as  well,  that  it  was  unfortunate  for 
China,  if  not  for  those  in  political  power  in  Peking,  that 
these  loans  should  have  been  made  without  control  as  to 
the  way  in  which  their  proceeds  should  be  spent — ^that 
China  was  getting  no  real  benefit  from  them  and,  indeed 
often  injury,  since  they  supplied  the  means  whereby  the 
devastating  civil  strife  in  the  country  was  maintained. 
Yielding  to  this  opinion,  the  Foreign  Office  of  the 
Japanese  Government  in  December,  1918,  published  the 
following  statement: 

In  view  of  the  far-reaching  effect  investments  of  Japanese  capi- 
taHsts  in  China  and  Siberia  are  Hkely  to  have  on  the  diplomatic, 
financial  and  economic  interests  of  the  country,  the  Government 
has  laid  down  the  following  Une  of  policy  to  be  pursued  in  the 
matter  of  investments : — 

1.  In  case  Japanese  capitalists  desire  to  open  negotiations  in 
future  for  the  conclusion  of  loans  or  similar  matters  which  may 
include  the  financing  of  the  administrative  expenditure  of  either 
the  Central  or  local  authorities  in  China  and  Siberia,  they  must 
first  notify  the  Foreign  Office  or  the  Japanese  Embassies,  Legations 
or  Consulates  abroad  of  the  fact  without  fail,  so  as  to  receive 
necessary  directions.  They  are  also  called  upon  to  report  on  the 
progress  of  such  negotiations  from  time  to  time.  When  such  a 
notification  is  received  the  Foreign  Office  will  confer  without  delay 
with  the  Finance  and  other  Departments  concerned  and  give  neces- 
sary directions  to  the  applicant. 


CHINA'S  FOEEIGN  DEBTS  511 

2.  The  Government  may  withhold  its  protection  from  capitalists 
■who  carry  on  negotiations  without  awaiting  the  instructions  of  the 
Foreign  Office  or  contrary  to  the  directions  given. 

3.  Such  directions  may  sometimes  be  given  to  the  applicants  by 
the  Finance  or  other  Departments  direct  when  the  step  is  deemed 
expedient  in  view  of  the  nature  of  the  transactions  involved  and 
the  stage  of  the  negotiations  reached. 

The  Proposed  New  Consortium.  In  June,  1918,  the 
United  States  Government  proposed  to  the  Governments 
of  Great  Britain,  France  and  Japan  that  a  new  Consor- 
tium be  established  to  finance  all  future  loans  to  China, 
industrial  as  well  as  administrative  or  political,  and 
backed  by  a  governmental  guarantee,  this  Consortium  to 
be  composed  of  national  groups  of  banks  of  the  four  par- 
ticipating Powers.  In  principle  this  plan  has  been 
accepted  by  the  four  governments,  but  for  reasons  which 
will  presently  be  mentioned,  the  plan  has  not  yet  been 
put  into  effect. 

As  outlined  in  a  memorandum  presented  by  the  Ameri- 
can Minister  at  Peking  in  July,  1919,  to  the  Chinese  Gov- 
ernment, and  based  upon  resolutions  adopted  at  a  meet- 
ing of  bankers  of  the  four  Powers  at  Paris  in  May  of  that 
year,  the  scheme  is  as  follows: 

Each  government  is  to  form  a  national  banking  group 
according  to  its  own  judgment  as  to  what  financial  inter- 
ests should  be  admitted,'  and  upon  what  terms.  As  for 
America  itself,  however,  the  Government  proposed  that 
the  banks  to  be  admitted  should  be  representative  of  the 
whole  country  and  thus  to  include  not  only  those  institu- 
tions which  already  had  interests  in  China,  but  such  other 
banks  as  might  desire  to  join.  Thirty-one  such  banks, 
from  different  parts  of  the  United  States,  it  was  said. 


512      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

had  signified  their  wish  and  intention  to  participate  as 
members  of  the  American  Group.  The  memorandnm 
ran: 

It  was  considered  by  all  to  be  a  reasonable  condition  of  member- 
ship in  the  American  Group  that  all  preferences  and  options  for 
loans  to  China  held  by  any  members  of  this  Group  should  be  shared 
by  the  American  Group  as  a  whole  and  that  all  future  loans  to 
China  which  have  any  governmental  guarantee  should  be  conducted 
in  common  as  group  business,  whether  it  was  for  administrative  or 
for  industrial  purposes. 

The  hope  was  expressed  that  the  other  three  govern- 
ments wonld  form  their  groups  upon  similar  terms.  This 
being  done,  the  memorandum  continued,  "  if  each  of  the 
four  national  groups  should  share  with  the  other  national 
groups  any  loans  to  China,  including  those  to  which  that 
national  group  may  have  a  preference,  or  on  which  it 
may  have  an  option,  and  all  such  business  arising  in  the 
future,  it  is  felt  that  the  best  interests  of  China  would  be 
served.'^ 

Replying,  under  date  of  October  8,  1918,  to  certain 
inquiries  that  had  been  made  by  the  other  governments, 
the  Government  of  the  United  States  said  that  the  plan 
proposed  did  not  necessarily  contemplate  the  dissolution 
of  the  old  Consortium,  but  that  it  was  hoped  that  the 
other  governments  would  form  their  respective  national 
groups  upon  such  a  comprehensive  basis  as  to  include 
not  only  all  the  members  of  the  old  Consortium,  but  also 
other  banking  interests,  not  so  associated,  who  had  made 
or  might  in  the  future  desire  to  make  loans  to  China. 
"  Nor,*'  it  was  declared,  "  did  the  American  Government 
in  making  its  proposal,  have  any  specified  loan  in  mind, 
but  was  endeavoring  to  lay  down  some  general  rule  for 


CHINA'S  FOREIGN  DEBTS  613 

future  activities  whicli  might,  in  a  broad  way,  meet  the 
financial  needs  and  opportunities  in  China.  It  was  for 
this  reason  that  no  specific  reference  was  made  to  the 
amount  of  the  loan  or  loans  to  be  raised,  the  revenues  to 
be  pledged  or  to  the  precise  objects  of  the  proposed  loan. 
It  was  contemplated  that  these  questions  would  be  deter- 
mined in  respect  to  each  case  as  it  might  arise.  The 
reference  to  a  relinquishment  by  the  members  of  the 
group  either  to  China  or  the  group,  of  any  options  to 
make  loans  which  they  now  hold  applied  primarily  to 
the  American  group  alone  and  to  an  agreement  between 
the  [Americanl  banks  and  the  United  States.  Thereby 
all  preferences  and  options  for  future  loans  in  China, 
having  any  governmental  guarantee,  held  by  the  indi- 
vidual members  of  the  American  group,  should  be  relin- 
quished to  the  group,  which  should,  in  turn,  share  them 
with  the  international  group.'* 

"  Such  relinquishment  of  options,*'  the  memorandum 
of  October  8,  went  on  to  say,  **was  considered  by  this 
[American]  Government  to  be  a  reasonable  condition  of 
membership  in  the  American  group,  and  while  it  recog- 
nized that  each  interested  government  must  necessarily 
make  its  own  arrangement  with  its  own  national  group, 
it  is  submitted  that  it  is  possible  properly  to  conduct  the 
business  of  the  international  group  only  by  similar  relin- 
quishment to  the  respective  national  groups  by  the  indi- 
vidual banks  forming  those  groups,  without  distinction 
as  to  the  nature  of  the  options  held." 

The  proposal  that  industrial  as  well  as  administrative 
loans  be  included  within  the  scope  of  the  new  Consortium 
activities,  it  was  declared,  was  based  upon  the  reason 
that,  in  practice,  it  was  often  not  easy  to  draw  the  line 

33 


514      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  distinction  between  the  two.  ' '  Both  alike  should  be 
removed  from  the  sphere  of  unsound  speculation  and  of 
destructive  competition.*' 

In  its  communication  to  the  other  Powers  the  American 
Government  had  made  reference  to  loans  which  * '  sought 
to  impair  the  political  control  of  China  or  lessen  the 
sovereign  rights  of  the  Republic  [of  China]."  This 
expression,  it  was  explained,  **  had  reference  only  to 
future  activities  of  the  American  group,  and  was  not 
intended  to  call  in  question  the  propriety  of  any  specific 
arrangement  in  operation  between  the  former  Consor- 
tium and  the  Chinese  Government,  or  between  any  other 
government  and  the  Chinese."  *'  It  can  be  definitely 
stated,"  the  memorandum  of  October  8  declared,  *'  that 
the  United  States  Government  did  not  mean  to  imply  that 
foreign  control  of  the  collection  of  revenues,  or  other 
specific  security  pledged  by  mutual  consent,  would  neces- 
sarily be  objectionable,  nor  would  the  appointment  under 
the  terms  of  some  specific  loan  of  a  foreign  advisor,  as 
for  instance,  to  supervise  the  introduction  of  currency 
reform. ' ' 

Finally,  it  was  declared  that  the  Russian  and  Belgian 
group  were,  for  the  present,  not  included  in  the  plan, 
merely  upon  practical  grounds  arising  out  of  existing 
conditions  of  fact.  The  inclusion  in  the  Consortium  of 
these  and  other  national  groups  would  be  a  matter  for 
future  consideration  when  a  desire  for  admittance  might 
be  expressed  by  them  and  when  they  might  be  in  a 
position  effectively  to  co-operate. 

As  has  been  said,  the  three  Governments  of  Great 
Britain,  France,  and  Japan  gave  their  approval  in  prin- 
ciple to  this  general  plan  advanced  by  the  American  Gov- 


CHINA'S  FOEEIGN  DEBTS  515 

ernment,  but,  when,  four  months  later,  a  representative 
of  one  of  the  leading  American  banks  visited  Japan  he 
was  greatly  surprised  to  find  that  the  Japanese  Govern- 
ment had  not  taken  even  the  initial  step  of  making  known 
to  its  bankers  that  such  a  plan  had  been  proposed  by  the 
American  Government.  And  it  soon  developed  that  the 
Japanese  Government  was  unwilling  to  co-operate  in  the 
plan  unless  loans  relating  to  South  Manchuria  and 
Eastern  Inner  Mongolia  should  be  wholly  excluded  from 
its  scope. 

This  position  implied  a  claim  on  the  part  of  Japan  of 
a  '  *  special  interest ' '  in  the  areas  mentioned  that  carried 
with  it  a  monopoly  of  rights  of  economic  and  political 
exploitation — a  construction  which  the  American  Gov- 
ernment was  not  willing  to  accept.^® 

After  discussions  extending  over  some  months,  the 
other  Powers  gained  the  impression  that  Japan  would 
be  satisfied  if  she  were  permitted  to  enumerate  the  inter- 
ests already  held  by  her  in  Manchuria  and  Mongolia 
which,  it  should  be  specifically  declared,  were  not  to  be 
prejudicially  disturbed  without  her  consent  by  the  opera- 
tions of  the  new  Consortium ;  but  when,  at  length,  Japan 
made  known  the  conditions  under  which  she  would  enter, 
it  was  found  that  again  was  presented  the  condition  that 
certain  areas  in  Manchuria  and  Mongolia  should  be 
declared  to  fall  outside  the  jurisdiction  of  the  Consor- 
tium. 


**  If  would  appear  that  Viscount  Uchida,  Minister  of  Foreign  Affairs, 
was  willing  that  Japan  should  give  unconditional  adherence  to  the  plan, 
but  that  he  could  not  carry  with  him  his  Cabinet,  the  majority  of  which 
were  controlled  by  the  opinion  of  (Jeneral  Tanaka,  Minister  of  War,  and 
of  some  of  the  so-called  "  Diplomatic  Council."  See  The  Japan  Advertiser, 
August  16,  1919, 


516      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  reports  of  the  negotiations  published  in  the  New 
York  Times  of  November  23  and  November  30, 1919,  and 
which  bear  all  the  earmarks  of  accuracy,  the  following 
statements  occur: 

In  the  report  under  date  of  November  23,  it  is  said : 

There  is  no  intention  upon  the  part  of  the  United  States  Gov- 
ernment to  encroach  upon  the  vested  interests  of  Japan  in  Man- 
churia, according  to  an  authoritative  statement  made  today.  In 
taking  its  position  against  the  exclusion  of  Southern  Manchuria 
and  Eastern  Inner  Mongolia  from  the  scope  of  the  international 
consortium  for  financing  China  the  State  Department  assumes  that 
the  Japanese  Government  has  misapprehended  the  purposes  of  the 
consortium. 

The  department  maintains  that  its  position  is  clearly  indicated 
when  consideration  is  given  to  the  w^ording  of  the  inter-group 
agreement  of  May  12,  which  in  Article  X  specified  that  only  those 
industrial  undertakings  are  to  be  pooled  on  which  substantial 
progress  has  not  been  made.  This  wording,  in  the  opinion  of  the 
department,  plainly  includes  those  enterprises  which  are  already 
developed  and  thus  constitute  vested  proprietary  interests,  such  as 
the  Southern  Manchuria  and  Supingkai-Chengchiatun  Railways, 
the  Fushun  Colliery,  etc.,  and  may  be  interpreted  to  include  the 
existing  options  for  the  extensions  of  railways  already  in  operation, 
such  as  the  proposed  continuation  to  Taonan  of  the  Supingkai- 
Chengchiatun  Railway  and  to  Hueining  (Hoiryong)  of  the  Kirin- 
Changchun  Railway. 

The  State  Department  maintains  further  that  if  Japan's  reser- 
vation is  urged  solely  with  a  view  to  the  protection  of  existing 
rights  and  interests  it  would  seem  that  all  legitimate  interests 
would  be  conserved  if  only  it  were  made  indisputably  clear  that 
there  was  no  intention  on  the  part  of  the  consortium  to  encroach 
upon  established  industrial  enterprises  or  to  compel  the  pooling  of 
existing  Japanese  options  for  their  continuation.  The  State  De- 
partment feels,  further,  that  the  Japanese  Government  should  be 
amply  content  with  the  understanding  that  certain  specific  enter- 
prises are  exemlpt. 


CHINA'S  FOEEIGN  DEBTS  517 

The  department,  in  its  negotiations  with  the  British  Govern- 
ment, says  it  will  not  accept  a  geographical  reservation  which  could 
not  fail  to  lend  itself  to  implications  foreign  to  the  purposes  of  the 
consortium.  It  states  also  that,  in  view  of  the  fundamental  identity 
of  purposes  and  methods  which  had  characterized  the  co-operation 
of  the  United  States  and  Great  Britain  in  China,  and  Siberia,  the 
United  States  Government  looks  confidently  to  Great  Britain  to 
exert  a  reassuring  influence  upon  its  ally,  Japan,  and  to  convince 
the  Japanese  Government  that  it  may  find  it  possible  to  authorize 
its  banking  group  to  enter  the  proposed  consortium  with  full  assur- 
ance that  no  legitimate  Japanese  rights  or  interests  will  thereby  be 
endangered. 

On  such  a  basis,  the  State  Department  declares,  the  United 
States  would  be  happy  to  co-operate  in  arranging  for  an  immediate 
advance  to  China  for  the  purpose  and  on  substantially  the  condi- 
tions suggested  by  the  British  Government,  these  conditions  em- 
bracing the  disbandment  of  the  Chinese  troops  raised  under  the 
War  Participation  Bureau;  the  disbandment  of  forces  now  being 
employed  against  Outer  Mongolia,  which  China  is  seeking  to  re- 
cover from  Eussia ;  the  disbursement  of  such  of  the  perpetual  [sic] 
loan  as  is  applicable  to  the  discharge  of  troops,  to  be  carried  out 
under  the  supervision  of  military  representatives  of  participating 
Governments;  the  disposal  of  the  balance  of  the  loan  to  be  under 
strict  supervision  of  the  participating  Governments  under  arrange- 
ments similar  to  those  made  in  connection  with  the  reorganization 
loan,  and,  finally,  a  solution  of  the  disputes  between  North  and 
South  China. 

Under  date  of  November  30,  the  Times  says : 

In  the  construction  that  has  been  given  by  this  Government  to 
the  British  Government,  it  is  contended  that  any  claim  that  may 
be  set  up  to  the  effect  that  the  recognition  of  special  interests  by 
the  United  States  in  the  Lansing-Ishii  agreement  was  intended  to 
imply  a  monopoly  or  a  priority  of  economic  or  industrial  rights  is 
negatived  by  the  concluding  paragraphs  of  the  agreement  which 
explicitly  and  without  limitation,  the  State  Department  maintains, 
preserve  the  principle  of  equality  of  commercial  and  industrial 
opportunity. 


518      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  construction  of  the  agreement  has  been  given  as  a  result  of 
Japan's  action  in  contending  for  a  reservation  of  her  asserted  rights 
in  South  Manchuria  and  Eastern  Inner  Mongolia,  and  by  an  in- 
quiry from  the  British  Foreign  Office  as  to  whether  the  reservation 
affecting  South  Manchuria  would  be  accepted  by  the  United  States 
Government. 

It  is  understood  that  in  its  note  the  State  Department  declared 
that  this  reassertion  of  the  "  open  door  "  was  understood  to  imply 
no  restriction  in  the  particular  case  of  Manchuria  and  that  this  is 
made  plain  by  the  fact  that  the  agreement  assumed  the  existence 
of  earlier  treaty  arrangements  on  the  subject,  one  of  the  most 
concrete  of  which  is  declared  to  be  the  Portsmouth  treaty  of  peace 
between  Japan  and  Russia,  by  which  the  contracting  parties  de- 
clared that  they  had  not  in  Manchuria  any  "  territorial  advantages 
or  preferential  or  exclusive  concessions  in  impairment  of  Chinese 
sovereignty  or  inconsistent  with  the  principle  of  equal  oppor- 
tunity," and  engaged  "  not  to  obstruct  any  general  measures  com- 
mon to  all  countries  which  China  may  take  for  the  development 
of  the  commierce  and  industry  of  Manchuria," 

In  connection  with  the  formation  of  the  Old  Consortium  for  the 
Chinese  currency  loan  in  1912,  the  State  Department  points  out, 
the  Japanese  and  Russian  groups,  having  made  reservations  re- 
garding non-application  of  restrictions  upon  their  independent 
action  in  Northern  China,  Manchuria  and  Mongolia  maintained  the 
right  to  withdraw  fram  participation  in  any  such  business  which 
their  respective  Governments  might  consider  "contrary  to  the 
interests  of  Russia  or  Japan." 

Even  the  position  sought  to  be  established  at  that  time  by  the 
Japanese  and  Russian  groups,  the  department  contends,  did  not 
contemplate  any  such  exclusive  rights  as  is  now  claimed  by  the 
Japanese  Government,  but  confined  itself  to  a  right  to  protest 
against  undertakings  deemed  positively  harmfful  to  the  national 
interests  of  the  two  countries. 

In  May,  1915,  furthermore,  the  department's  communication 
continues,  during  the  negotiations  between  Japan  and  China,  which 
led  to  the  so-called  agreements  of  May  25,  involving  certain  special 
political  and  economic  advantages  in  favor  of  Japan  in  Manchuria 


CHINA'S  FOREIGN  DEBTS  519 

and  Mongolia,  the  United  States  Government  found  it  necessary  to 
advise  both  interested  Governments  that  "  it  cannot  recognize  any 
agreement  or  undertaking  which  has  been  entered  into,  or  which 
may  be  entered  into,  between  the  Governments  of  China  and  Japan 
impairing  the  treaty  rights  of  the  United  States  and  its  citizens 
in  China,  the  political  or  territorial  integrity  of  the  Republic  of 
China,  or  the  international  policy  relative  to  China  cominonly 
known  as  the  open-door  policy." 

The  reservation  thus  made  in  behalf  of  the  United  States  Gov- 
ernment, the  communication  asserts,  has  never  been  withdrawn  and 
must  be  regarded  as  a  part  of  the  res  gestae  to  be  considered  in 
construing  the  position  of  the  United  States  in  reference  to  the 
question  now  at  issue. 

The  Department  asserts  that  it  finds  itself,  therefore,  unable  to 
concur  in  the  suggestion  that  a  solution  of  the  deadlock  in  the 
consortium  negotiations,  occasioned  by  Japan's  insistence  upon 
reservations,  might  be  found  in  accepting  the  Japanese  reservation 
regarding  South  Manchuria.  It  adds  that  if  the  adoption  of  the. 
consortium  were  to  carry  with  it  the  recognition  of  a  doctrine  of 
spheres  of  interest  mlore  advanced  and  far-reaching  than  was  ever 
applied  to  Chinese  territory  even  when  the  dissolution  of  the 
Chinese  Empire  seemed  imminent,  it  would  be  a  calamity. 

The  telegram  to  the  British  Foreign  Office  concluded  by  saying 
it  was  to  be  doubted  whether  the  Japanese  Government  would  find 
it  feasible  to  persist  in  its  present  pretensions  or  to  maintain  a 
policy  of  financial  rivalry  if  confronted  with  the  alternative  of 
co-operation  or  competition  with  those  whose  desire  is  to  relieve 
the  Chinese  situation  without  taking  advantage  of  it  to  seek  special 
benefits,  and  that  the  attitude  hitherto  taken  by  the  Japanese 
bankers  seemed  clearly  to  indicate  their  appreciation  of  the  imprac- 
tibility  of  separate  action.  Ambassador  Davis  at  London,  was 
instructed  to  urge  upon  the  British  Government  the  particular 
importance  attached  by  the  United  States  to  this  question. 

Other  Loans.  The  most  important  of  the  long  term 
loans  of  the  Chinese  Lnperial  Government,  which  have 
not  been  already  described,  are  the  following : 


520      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

Anglo-Chinese  Loan  of  1914.  This  loan,  amounting  to 
£375,000,  was  obtained  from  the  British  and  Chinese 
Corporation  under  agreement  of  February  14,  lOM.^*'  It 
is  secured  by  a  lien  upon  the  surplus  revenues  of  the 
Peking-Mukden  Railway,  and  was  obtained  to  repay  the 
Japanese  firm  of  Okura  &  Co.  a  loan  secured  by  a  mort- 
gage upon  the  Shanghai-Fengching  Railway. 

Industrial  Loan  of  1913.  This  loan,  obtained  from  the 
Banque  Industrielle  de  Chine,  under  agreement  of 
October  9,  1913,  was  for  150,000,000  francs,  but  only 
100,000,000  francs  have  been  advanced.  Its  purpose  was 
the  improvement  of  the  port  of  Pukow,  the  establishment 
of  national  industries  and  the  construction  of  national 
public  works.  As  security  these  national  industries  and 
public  works  were  pledged,  and  if  these  should  prove 
inadequate  there  were  pledged  the  revenues  from  **  all 
the  municipal  taxes  of  Peking  which  are  now  or  may 
hereafter  be  levied,  such  as  land  tax,  tax  upon  carriages 
and  rickshaws,  taxes  upon  water,  gas,  electricity  ";  also 
the  revenues  "  from  the  imposts  upon  alcohol,  which  are 
now  or  may  hereafter  be  imposed  by  the  Central  Govern- 
ment in  aU  the  provinces  of  the  territory  of  the  Chinese 
Republic  situated  to  the  north  of  the  Yangtze  River."  ^* 

Banque  Industrielle  Loan  of  1914.  At  the  time  that 
negotiations  were  being  had  with  the  Consortium  for  the 
Reorganization  Loan,  the  Chinese  Government  also  suc- 
ceeded in  obtaining  an  agreement,*^  signed  January  21, 

»  MacMurray,  No.  1908/3. 

"As  to  these  additional  guarantees,  see  Annexes  to  the  original  agree- 
ment, dated  March  2,  1914,  MacMurray,  No.  1913/10. 
"For  text,  see  MacMurray,  No.  1914/2. 


CHINA'S  FOREIGN  DEBTS  531 

1914,  with  the  Banque  Industrielle  de  Chine  ^*  for  a  loan 
of  600,000,000  francs,  bearing  interest  at  5% .  Nominally, 
the  proceeds  were  to  be  used  for  railway  construction  and 
the  equipment  of  the  port  of  Yamchow.  In  fact,  however, 
there  was  not  sufficient  control  provided  to  prevent  the 
Chinese  Government  from  using  the  funds  thus  to  be 
obtained  for  current  administrative  expenses.  As 
security  were  assigned  the  immovable  property  and  rail- 
way stock  and  revenues  of  the  Yamchow- Yunnanfu- 
Suifu-Chunking  Railways,  and  the  materials  and  appur- 
tenances of  the  port  of  Yamchow. 

As  yet  construction  has  not  been  begun  upon  the  rail- 
ways provided  for  under  this  agreement  and  MacMurra;? 
reports  (in  a  note  to  his  No.  1914/2)  that  it  is  understood 
that  the  loan  has  not  been  issued,  although  advances  to 
the  amount  of  32,115,000  francs  have  been  made  to  the 
Chinese  Government. 

Kirin  Mining  and  Forest  Loan.  This  loan  made  by  a 
Japanese  banking  group  composed  of  the  Exchange  Bank 
of  China,  the  Industrial  Bank  of  Japan,  the  Bank  of 
Taiwan  and  the  Bank  of  Chosen,  under  agreement  of 
August  2,  1918,34  was  for  yen  30,000,000,  its  ostensible 
purpose  being  the  development  of  gold  mining  and 
forestry  in  the  two  Manchurian  provinces  of  Heilung- 
kiang  and  Kirin.  As  security  were  pledged  the  Govern- 
ment's revenues  from  the  gold  mines  and  national  forests. 
In  case  China  should,  during  the  operation  of  the  loan, 
wish  to  make  other  loans  in  respect  to  the  mines,  national 

"A  French  corporation  which  had  back  of  it  the  Peking  Syndicate,  a 
British  Corporation  whose  shares,  however,  were  largely  held  in  France. 
"For  translation  of  this  loan  agreement,  see  MacMurray,  No.  1918/11. 


522      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

forests  and  their  revenues  or  to  dispose  of  them,  the 
banks  were  first  to  be  consulted. 

By  notes  attached  to  the  loan  agreement  it  was  provided 
that  *  *  for  the  purposes  of  enabling  the  gold  mining  and 
forestry  offices  to  attain  their  object,  and  assuring  a 
source  from  which  to  secure  funds  required  for  the 
redemption  of  the  loan,  Japanese  experts  shall  be 
engaged  to  assist  in  and  perform  the  business  of  the  two 
offices. ' ' 

Of  this  loan,  the  total  amount,  yen  30,000,000,  is  out- 
standing. 

War  Participation  Loan.  By  an  agreement  of  Sep- 
tember 28, 1918,  with  a  Japanese  banking  group,"^  a  loan 
of  yen  20,000,000  was  obtained  by  the  Chinese  Govern- 
ment, the  preamble  of  the  loan  agreement  reading  as 
follows : 

In  accordance  with  the  Sino-Japanese  military  cooperation  agree- 
nient,  the  Chinese  Government  ...  in  view  of  the  need  of  securing 
funds  for  organizing  a  defensive  army  so  as  to  be  able  to  fulfil  its 
cooperative  duties,  and  also  because  of  the  expenses  in  participating 
in  the  war,  has  entered  into  a  loan  contract  with  the  Bank  of 
Chosen,  the  Industrial  Bank  of  Japan,  and  the  Bank  of  Taiwan. 

No  security  beyond  Chinese  Government  treasury 
certificates  was  exacted  or  given  in  the  body  of  the  agree- 
ment, but  in  a  note  of  even  date  the  Chinese  Minister  at 
Tokyo,  in  behalf  of  his  Government,  promised  '  *  that  the 
tax  system  in  China  shall  be  reformed  in  the  future  and 
the  revenues  therefrom  shall  be  reserved  as  the  sources 
for  the  fund  for  the  redemption  of  the  loan. ' ' 

Upon  this  same  date,  September  28,  1918,  were  signed 

"For  translation  of  this  agreement,  see  MacMurray,  No.  1918/14. 


CHINA'S  FOREIGN  DEBTS  523 

the  preliminary  agreement  granting  to  Japan  the  right 
to  construct  four  additional  railways  in  Manchuria,  and 
the  agreement  with  reference  to  the  Tsinanfu-Shuntefu 
and  Kaomi-Hsuchow  extensions  of  the  Shantung  Rail- 
ways. 

Telegraph  Loan  of  1918.  By  an  agreement  of  April  30, 
1918,^^  the  Japanese  syndicate  of  banks  agreed  to  loan 
to  the  Chinese  Government  yen  20,000,000,  the  term  to  be 
five  years,  and  the  security  to  be  '*  all  the  property  and 
revenue  of  the  telegraph  lines  throughout  the  Republic  of 
China. ' '  In  case  future  foreign  loans  in  connection  with 
the  telegraph  lines  should  be  desired  by  China  the  Japa- 
nese banks  were  first  to  be  consulted.  * 

Plague  Prevention  Loan.  In  1918,  by  an  agreement 
signed  January  18,^*^  with  the  Banque  de  I'Indo-Chine, 
Hongkong  and  Shanghai  Banking  Corporation,  Russo- 
Asiatic  Bank,  and  the  Yokohama  Specie  Bank,  China 
borrowed  $1,000,000  for  expenses  in  connection  with  the 
combatting  of  the  spread  of  the  plague  which  had  broken 
out  in  the  north.    This  loan  has  since  been  repaid. 

Other  Loans.  The  loans  which  have  been  described  in 
the  foregoing  pages  by  no  means  sum  up  the  extent  of 
China's  foreign  debts.  Supplementing  them  are  many 
loans  which  have  been  made  for  special  purposes,  and  also 
a  great  number  of  short  term  debts.  And,  of  course,  in 
addition  are  the  many  railway  loans  the  more  important 
of  which  will  be  mentioned  in  the  next  following  chapter.®* 

"MacMurray,  No.  1918/7.  "MacMurray,  No.  1918/2. 

*  The  Far  Eastern  Review  for  August,  1919,  gives  detailed  lists  of  out- 
standing Short  Term  and  Domestic  Loans. 


CHAPTEE  XX 
Railway  Loans  and  Foreign  Control 


Introductory.  In  an  earlier  chapter  in  which  was  traced 
the  development  of  Spheres  of  Interest  in  China,  an 
account  was  given  of  the  circumstances  under  which  the 
more  important  agreements  with  reference  to  the  con- 
struction and  operation  of  railways  were  entered  into 
with  the  different  Powers  or  with  their  respective  finan- 
cial groups.  In  the  present  chapter  it  is  proposed  to 
consider  in  a  more  systematic  and  more  chronological 
manner  the  development  of  railway  enterprises  in  China, 
but  with  especial  reference  to  the  extent  to  which  the 
foreign  banks  or  syndicates  of  banks,  which  have  made 
railway  loans,  have  retained  for  themselves  control  over 
the  construction  and  operation  of  the  railway  lines  con- 
cerned. 

As  regards  *  *  control ' '  it  will  be  found  that  this 
extends,  or  has  extended,  to  the  following  matters:  the 
supervision  of  construction;  the  purchase  of  material 
for  construction,  rolling  stock  and  other  operating  equip- 
ment ;  the  audit  or  other  supervision  of  expenditures,  and 
receipts ;  and  the  actual  operation  of  the  roads.^ 

*  Speaking  of  the  control  provided  for  in  the  railway  "  concesaions,"  Mr. 
Kent,  writing  in  1907   (Railway  Enterprise  in  China,  p.  24)   says: 

"  In  this  connection  the  convenient  term  concession  has  been  very  gen- 
erally, and  perhaps  somewhat  loosely,  applied.  When  we  come  to  analyse 
them  we  find  that  primarily  these  arrangements  are  in  the  nature  of 
underwriting  contracts.  The  contracting  syndicate  imdertakes  to  provide 
90  per  cent.,  for  example,  of  a  loan  of  so  many  millions  of  pounds  or 

524 


EAILWAY  LOANS  AND  FOREIGN  CONTROL      525 

With  regard  to  the  purposes  aimed  at,  a  distinction 
is  to  be  made  between  the  control  which  is  provided  in 
order  that  security  may  exist  for  the  repayment  of  the 
loans  and  their  charges ;  and  the  control  of  the  operation 
of  the  line  for  strategical  or  other  political  purposes.  As 
examples  of  this  latter  class  may  be  instanced  the  Russian 
and  Japanese  lines  in  Manchuria,  the  German  line  in 
Shantung  from  Tsingtao  to  Tsinanfu,  and  the  French 
system  in  Yunnan  and  Kwangsi.^ 

These  lines  owed  their  origin  to  concessions  based  upon 
treaties  with  the  Powers  concerned,  and  are,   at  the 

dollars,  as  the  case  may  be,  repayable  at  a  certain  specified  time  and 
bearing  interest  at  the  rate  of  5  per  cent,  per  annum;  it  takes  its  chance 
of  being  able  to  float  the  loan  upon  the  public  at  a  higher  percentage  of 
its  nominal  value.  What  has  happened  in  most  cases  is  that  on  every 
100  bond,  for  example,  issued  by  the  Chinese  Government  the  latter  have 
received  90,  while  the  syndicate  have  succeeded  in  getting  them  taken  up 
at  97  or  thereabouts,  thus  securing  a  respectable  margin  on  the  transac- 
tion. But  xmder  the  recently  concluded  agreement  in  connection  with  the 
Canton-Kowloon  Railway  the  Chinese  Government  have  secured  far  more 
favourable  terms. 

"  This  is  one  aspect  of  the  contract.    There  appear  to  be  three  others. 

Firstly,  the  syndicate  is  given  the  right  to  construct  the  line,  and  in 
return  for  its  trouble  in  this  connection  it  is  in  most  cases  allowed  a  sum 
equivalent  to  5  per  cent,  on  the  total  cost.  It  is  this  right  which  pre- 
siunably  gives  rise  to  the  idea  of  concession. 

Secondly,  on  completion  of  the  line  it  is  placed  in  some  cases  under  a 
theoretically  joint  Chinese  and  foreign  control,  in  which  in  practice  the 
foreign  element  predominates.  In  other  cases  the  Chinese  have  merely  a 
consultative  voice. 

Thirdly  and  lastly,  at  this  stage,  or  rather  from  the  time  of  the  issue 
of  the  loan,  the  syndicate  becomes  trustees  for  the  bondholders,  and  it  is 
easy  to  see  that,  in  the  nature  of  things,  the  loan  being  secured  by  a  first 
mortgage  upon  the  railway,  the  position  of  the  syndicate  for  all  practical 
purposes  must  be  that  of  mortgagees  in  possession. 

Such  are  the  underlying  principles  of  the  agreements  which  confer  these 
rights,  which  for  want  of  a  more  precise  term  we  call,  and  shall  continue 
to  call,  concessions.     The  details,  of  course,  vary." 

*The  British  line  from  Burma  into  Yunnan  and  Szechuan,  when  built, 
will  fall  within  this  class.    As  yet  it  has  been  only  surveyed. 


526      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

present  time,  actually,  if  not  nominally,  the  public  prop- 
erty of  those  Powers.  The  conditions  under  which  they 
were  built  have  already  been  sufficiently  stated  and,  there- 
fore, need  not  be  rehearsed  in  this  place.* 

Shanghai-Woosung  Railway.  The  first  attempt  to  build 
and  operate  a  steam  railway  in  China  was  in  1876,  when, 
under  permission  to  a  foreign  concern  to  construct  an 
* '  improved  road  ' '  a  line  of  rails  was  laid  from  Shanghai 
to  Woosung.  After  being  in  operation  but  a  few  weeks, 
the  local  Taotai  insisted  upon  buying  out  the  company, 
after  which  he  had  the  track  torn  up,  the  station  at 
Shanghai  destroyed,  and  the  rolling  stock  sent  out  of  the 
country."* 

Peking-Mukden  Line.  The  next  line  to  be  started  was 
one  which,  though  unambitious  in  its  scope,  became  ulti- 
mately a  part  of  the  important  line  from  Peking  to 
Mukden. 

In  1877  permission  was  obtained  by  the  Chinese  Engi- 
neering and  Mining  Company  to  build  a  railway  from  its 
mines  at  Kaiping  to  a  canal  at  Hsukuchuang,  a  distance 
of  six  miles.  It  had  not  been  the  intention  of  the  Govern- 
ment that  the  cars  should  be  drawn  by  steam,  but  in  fact 
the  engineer  in  charge  managed  to  construct  and  operate 
a  steam  locomotive  which  received  the  name  "  The 
Rocket  of  China. ' '  The  use  of  this  engine  was  acquiesced 
in,  and  in  1886  permission  was  obtained  to  extend  the 
line  southward  to  Tientsin,  which  extension  was  com- 

•  They  are  nominally  the  property  of,  and  oi>erated  by,  specially  char- 
tered corporations. 

'The  proximate  cause  of  this  action  was  the  killing  of  a  Chinese  on 
the  track. 


KAILWAY  LOANS  AND  FOREIGN  CONTROL      527 

pleted  in  1889.  In  1891  the  further  extension  of  this  line 
northward  to  Shanhaikuan  was  authorized.  A  few  years 
later  the  ownership  of  the  road  was  acquired  by  the 
Imperial  Government  and  its  operation  placed  in  the 
hands  of  the  Chinese  Imperial  Railways  Administration. 

In  1894  the  line  was  again  extended  from  Tientsin  to 
Peking.^ 

After  the  Sino-Japanese  War  a  loan  of  £2,300,000 
(16,000,000  taels)  was  obtained  from  the  British  banks 
for  extending  the  line  to  Mukden,  the  loan  agreement 
bearing  date  of  October  10, 1898.* 

The  conditions  of  this,  one  of  the  first  of  China's  rail- 
way loans,  need  to  be  summarized,  as  they  show  the  char- 
acter of  the  ' '  control ' '  provided  for,  and  also  furnished 
a  model  for  a  number  of  later  loans. 

The  loan  was  made  **  a  first  charge  upon  the  security 
of  the  permanent  way,  rolling  stock,  and  entire  property, 
with  the  freight  and  earnings  of  the  existing  lines 
between  Peking  and  Shanhaikuan,  and  on  the  freights 
and  earnings  of  the  new  lines  when  constructed. ' '  Under- 
taking was  given  by  the  Chinese  Government  that  the 
roads,  buildings,  rolling  stock,  etc.,  would  be  kept  in  good 
condition.  If  the  construction  of  branch  lines  or  exten- 
sions connecting  with  the  lines  concerned  should  be  later 
proposed,  the  British  and  Chinese  Corporation  was  to  be 
applied  to  for  loans  if  foreign  capital  was  needed. 

'To  Fengtai  a  short  distance  from  Peking. 

•  The  lending  party  was  the  British  and  Chinese  Corporation,  which  was 
a  syndicate  formed  by  the  Hongkong  and  Shanghai  Banking  Corporation 
and  Jardine  Matheson  &  Co.  In  terms  the  loan  was  "  for  the  construction 
of  a  railway  line  from  Chung-hou-so  to  Hsin-ming-ting  and  a  branch  line 
to  Ying-tzu,  and  for  the  redemption  of  existing  loan  made  to  the  Tientsin- 
Shanhaikuan  and  Tientsin-Lukouchiao  Railway  lines."  For  text  of  loan 
agreement,  see  MacMurray,  No.  1898/20. 


528      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  principal  and  interest  of  the  loan  was  further 
declared  to  be  a  direct  obligation  of  the  Imperial  Govern- 
ment of  China.  In  case  of  default,  the  railways  were  to 
be  handed  over  to  the  Corporation  to  be  managed  by  its 
representatives  until  the  loan  and  interest  charges  were 
paid  in  full. 

No  further  loan  was  to  be  charged  upon  the  security 
named,  until  the  loan  was  redeemed,  nor  were  the  roads 
to  be  parted  with  by  the  Chinese  Government. 

During  the  currency  of  the  loan,  the  Chief  Engineer  of 
the  road  was  to  be  a  British  subject;  and  the  principal 
members  of  the  railway  staff  to  be  capable  and  expe- 
rienced Europeans,  appointed  by  the  Chinese  Adminis- 
trator-General of  the  railways,  and  subject  to  dismissal 
by  him  for  misconduct  or  incompetency  after  consulta- 
tion with  the  Chief  Engineer.  If  Chinese  with  sufficient 
engineering  or  traffic  experience  could  be  found  they 
were  to  be  appointed  as  well  as  Europeans. 

A  capable  and  efficient  European  railway  accountant 
was  to  be  appointed  **  with  full  powers  to  organize  and 
direct  the  keeping  of  the  railway  accounts,  and  to  act 
with  the  Administrator-General  and  the  Chief  Engineer 
of  the  railway  in  the  supervision  of  receipts  and  expendi- 
tures." Details  were  added  as  to  the  manner  in  which 
revenues  were  to  be  handled  and  disbursements  made.''' 

*  Commenting  upon  this  agreement,  Mr.  Rea,  in  the  Far  Eastern  Review, 
November,  1909,  said: 

"  China  voluntarily  admitted  the  principle  that  her  officials  were  incom- 
petent to  honestly  administer  the  proceeds  of  a  foreign  loan  to  the  satis- 
faction of  the  investor.  And  having  once  placed  her  financial  probity  in 
question,  she  has  been  forced  through  successive  similar  agreements  to 
follow  a  practice  which  no  other  nation  in  the  world  tolerates  for  an 
instant.  ...  In  short,  while  China  could  give  ample  security  and  pay 
good  interest,  she  could  not  be  entrusted  with  the  expenditure  of  the 
money." 


EAILWAY  LOANS  AND  FOEEIGN  CONTEOL      5^9 

During  the  Boxer  troubles  the  operation  of  the  Peking 
Shanhaikuan  line  was  taken  over  by  the  British  troops, 
and  surrendered  again  to  the  Chinese  Civil  Administra- 
tion by  agreement  of  April  29, 1902.^  By  an  **  additional 
agreement  "  of  the  same  date,  the  Chinese  agreed  that 
"  for  the  better  management  of  the  railways  after  the 
British  military  authorities  have  handed  them  over  to 
the  Chinese  Administration,  in  the  interests  of  the 
Chinese  public  revenue  and  of  the  British  bondholders," 
the  following  conditions  regarding  the  future  operation 
of  the  road  should  be  observed : 

The  Board  of  Administration  acting  under  the 
authority  of  the  Administrator-General  of  the  Northern 
Railways,  should  be  composed  of  a  managing  director,  a 
foreign  director,  and  a  British  general  manager,  the  last 
named  **  to  control  the  work,  foreign  and  native  work- 
men, the  inspection  of  materials,  etc." 

A  representative  of  the  British  and  Chinese  Corpora- 
tion to  deliberate  on  important  railway  matters. 

An  English  secretary  and  Chinese  translator  to  be 
appointed  to  assist  in  the  transaction  of  international 
business. 

A  competent  European  storekeeper  to  be  appointed. 

All  appointments  of  officials  and  employes  of  the  road 
to  be  subject  to  the  approval  of  the  board  and  of  the 
Administrators-General. 

The  books  to  be  audited  annually  by  a  qualified 
accountant  not  connected  with  the  railways  and  selected 
by  the  representative  of  the  British  and  Chinese  Corpo- 
ration; and  results  of  the  operations  of  the  road  to  be 

•  For  the  texts  of  these  agreements,  see  MacMurray,  No.  1902/4. 
34 


530      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

published  annually  in  the  same  manner  as  the  Imperial 
Maritime  Customs  Reports. 

All  rolling  stock,  materials,  etc.,  obtained  from  foreign 
countries  for  use  of  the  railways  as  far  as  possible  to  be 
purchased  by  means  of  public  tenders. 

The  line  from  the  Chienmen  [Gate]  of  Peking  to  Fengtai 
(the  terminus  of  the  Tientsin-Peking  Branch)  and  from 
Peking  to  Tungchow,  which  had  been  constructed  by  the 
British  Military  Administration,  to  be  added  to  form  a 
part  of  the  railways  of  North  China  pledged  as  security 
for  the  original  loan  of  £2,300,000. 

Finally,  there  was  added  the  following  provision  with 
reference  to  future  railways: 

Under  clause  III  of  the  agreement  of  October  10,  1898,  it  is 
stipulated  that  the  construction  of  branch  lines  or  extensions  shall 
be  undertaken  by  the  Northern  Railways  Administration,  and  the 
intent  of  this  stipulation  is  hereby  confirmed  in  order  to  secure 
the  existing  interests  of  the  railways.  It  is  therefore  agreed  that 
the  construction  of  any  new  i^ailway  within  a  distance  of  eighty 
miles  of  any  portion  of  the  existing  lines,  for  which  concessions 
have  not  been  signed  previous  to  the  date  of  this  agreement,  shall 
be  undertaken  by  the  Administrators-General  of  the  Imperial 
Northern  Railways,  Such  lines  as  the  following :  A  northern  hue 
from  Peking  or  Fengtai  to  the  Great  Wall;  a  chord  line  from 
Tungchow  to  Kuyeh  or  Tongshan;  a  line  from  Tientsin  to  Pao- 
tingf u ;  shall  not,  in  view  of  the  interests  of  the  Imperial  Northern 
Railways,  be  allowed  to  fall  into  other  hands. 

Anglo-Russian  Understanding  of  1898.  The  entrance  of 
British  financial  interests  into  the  north  of  China,  as 
represented  by  the  agreement  of  October  10,  1898,  had 
aroused  the  apprehensions  of  the  Russians,  and,  as  stated 
earlier  in  this  volume  ®  had  led  to  the  Anglo-Russian 

'Ante,  p.  282. 


EAILWAY  LOANS  AND  FOREIGN  CONTROL      531 

exchange  of  notes  of  April  28,  1899,  in  which  Great 
Britain  had  undertaken  not  to  seek  on  her  own  account 
or  on  behalf  of  her  nationals  any  railway  concessions  to 
the  north  of  the  Great  Wall,  that  is,  north  of  Shanhai- 
kuan,  or  to  obstruct,  directly  or  indirectly,  applications 
on  the  part  of  the  Russian  Government  for  railway  con- 
cessions north  of  the  wall.  Russia  reciprocally  under- 
took not  to  seek  railway  concessions  in  the  valley  of  the 
Yangtze  or  to  obstruct  the  granting  of  railway  conces- 
sions to  British  interests  in  that  region. 

The  section  of  the  line  north  to  Hsinmintun,  thirty-six 
miles  from  Mukden,  was  completed  in  1903 ;  the  gap  from 
Hsinmintun  to  Mukden  was  built  by  the  Japanese  during 
the  Russo-Japanese  War,  and  was  surrendered  in  1907  to 
the  Chinese.^® 

The  branch  line  from  Earin  to  Changchun,  eighty- 
seven  miles  in  length,  was  built  by  the  Japanese  and 
opened  to  traffic  in  1913.  Under  one  of  the  more  recent 
treaties  with  Japan,  this  line  is  eventually  to  be  trans- 
ferred to  Japan  to  be  operated  in  connection  with  her 
South  Manchuria  Railway  system. 

Peking-Kalgan  (Peking-Suiynan)  Railway.  This  road 
of  124  miles,  opened  in  1909,  and  later  extended  in  1915 
to  Fengchen,  266  miles  from  Fengtai  (where  it  connects 
with  the  Peking-Mukden  and  Peking-Hankow  lines),  was 
built  from  the  earnings  of  the  Peking-Mukden  line,  and 
is  the  only  road  in  China  built  wholly  with  Chinese 
capital  and  by  Chinese  engineers.  The  Chinese  plan,  at 
some  future  time,  to  extend  the  line  to  Urga  and  Kiakhta, 

*By   an   agreement  of  May  27,   1907,  for  which  see  MacMurray,  No. 
1907/5. 


532      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

750  miles  from  Kalgan,  and  thus  connect  with  the  Trans- 
Siberian  line. 

There  is  a  short  branch  of  sixteen  and  a  half  miles 
from  Peking  to  Mentoukow,  which  was  opened  to  traffic 
in  1908. 

The  Peking-Kalgan  line  is  wholly  nnder  Chinese  con- 
trol and  administration. 

In  1918  a  loan  was  obtained  by  the  Chinese  Government 
from  Japanese  banks.^^  The  administration  of  the  road 
remains  in  Chinese  hands,  bnt  the  Japanese  are  to  have 
preference  in  the  matter  of  future  purchases  of  supplies. 

Shanghai-Nanking  Railway.  The  construction  of  this 
important  railway  was  arranged  for  under  a  loan  agree- 
ment of  July  9,  1903,  between  the  Chinese  Government 
and  the  British  and  Chinese  Corporation.^^  Tj^-g  agree- 
ment provided  for  a  fifty-year  loan  not  exceeding 
£3,250,000  to  be  issued  by  the  Corporation,  which  was 
itself  to  have  control  of  the  building  and  equipment  of 
the  line.  In  all  matters  relating  to  the  construction  and 
administration  of  the  railway  the  Corporation  was,  how- 
ever, to  give  particular  heed  to  the  * '  opinions,  habits  and 
ideas  of  the  Chinese  people,"  and,  when  practicable, 
Chinese  were  to  be  employed  in  positions  of  trust  and 
responsibility. 

The  loan  was  secured  by  a  mortgage  *'  upon  the  rail- 
way not  completed  between  Woosung^^  and  Shanghai, 

"  The  banks  took  up  the  iinsubscribed  domestic  loan  of  the  Railway. 

"This  agreement  superseded  one  for  the  building  of  the  road  which  had 
been  signed  between  the  same  parties  on  May  13,  1898.  For  the  text,  see 
MacMurray,  No.  1903/2. 

"Woosung  is  ten  miles  from  Shanghai  nearer  the  mouth  of  the  river 
where  vessels  of  deep  draught  are  compelled  to  unload  their  cargoes 
intended  for  Shanghai. 


EAILWAY  LOANS  AND  FOREIGN  CONTROL      533 

and  also  on  all  landSj  materials,  rolling  stock,  bnildings, 
property,  and  premises  of  every  description  purchased 
or  to  be  purchased  by  the  railways  herein  referred  to, 
and  on  the  last-mentioned  railways  themselves  as  and 
when  constructed  and  on  the  revenue  of  all  descriptions 
derivable  therefrom."  The  bonds  to  be  issued  and  repre- 
senting the  loan  were  to  be  Imperial  Chinese  Government 
bonds  and  therefore  obligating  that  Government  to  their 
payment. 

The  Director-General  was  to  appoint  a  board  of  five 
Commissioners  for  supervising  the  construction  and 
operation  of  the  road,  two  of  whom  were  to  be  Chinese. 
The  other  three  were  to  be  British,  including  the  Engi- 
neer-in-Chief,  and  appointed  by  the  Corporation.  The 
appointment,  salaries  and  functions  of  all  the  employees 
of  the  railway,  Chinese  and  foreigners  (except  the  Engi- 
neer-in-Chief,  who  was  to  be  nominated  by  the  Corpora- 
tion and  approved  by  the  Director-General),  were  to  be 
made  and  fixed  by  this  board.  For  the  service  of  the 
railway  any  Chinese  of  official  rank  and  competent  for 
the  work  might  be  recommended  by  the  board  for  employ- 
ment, but  for  the  important  offices  foreigners  of  ability 
and  experience  were  to  be  selected.  The  board  was  at 
all  times  to  have  access  to  the  receipts  and  disbursements 
of  the  road,  and  the  Chief  Accountants*  department  was 
to  be  composed  of  Chinese  and  foreigners.  The  lands 
needed  by  the  road  were  to  be  purchased  at  a  cost  not  to 
exceed  £150,000.  During  the  currency  of  the  loan  the 
road  was  not  to  be  again  mortgaged  to  any  other  party, 
Chinese  or  foreign.  As  remuneration  for  its  superin- 
tendence and  other  services  the  Corporation  was  to 
receive  five  per  cent,  on  the  entire  cost  of  all  materials 


534      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

purchased  for  the  road.  Chinese  materials  purchased 
and  products  of  the  Hanyang  Iron  Works  were  to  be 
preferred  if  price  and  quality  were  suitable. 

The  Board  of  Commissioners  was  authorized  to  main- 
tain a  railway  police  of  Chinese  for  the  protection  of  the 
line,  to  be  paid  for  by  the  line.  These  police  were  not  to 
interfere  with  matters  outside  the  railway. 

It  was  agreed  that  after  deducting  from  the  income  of 
the  road  all  working  and  other  expenses,  the  Corporation 
was  to  receive  twenty  per  cent,  of  the  net  profits  in  the 
form  of  certificates  to  an  amount  equal  to  one-fifth  of  the 
cost  of  the  line,  which  certificates  the  Chinese  Adminis- 
tration was  to  have  the  right  to  redeem  at  their  face  value 
at  the  end  of  the  fifty  years'  term. 

Without  the  express  consent  in  writing  of  the  Director- 
General  and  the  Corporation  no  other  rival  railway  and 
no  parallel  line  to  the  Shanghai-Nanking  Railway  was  to 
be  built  *'  to  the  injury  of  the  latter 's  interest  within  the 
area  served  by  the  Shanghai-Nanking  line  or  branch 
lines.'* 

The  existing  Shanghai- Woosung  line  was  to  be  taken 
over,  at  a  price  agreed  upon,  as  part  of  the  Shanghai- 
Nanking  system.^^ 

The  Shanghai-Nanking  concession  constituted  one  of 
the  fruits  of  the  "  battle  of  concessions  "  (to  use  Lord 
Salisbury's  phrase)  waged  in  China,  1897  to  1899.  An 
examination  of  its  provisions  shows  that,  to  all  intents 
and  purposes,  the  operation  as  well  as  the  construction  of 
the  road  was  taken  out  of  the  hands  of  the  Chinese,  and, 

'*  For  further  elaboration  of  the  "  control "  to  be  exercised  by  the  Cor- 
poration, see  the  "Working  Agreement,"  of  April  13,  1908.  MacMurray, 
note  to  No.  1903/2. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      535 

at  the  present  time,  the  amount  of  Chinese  control  over 
this  line  is  very  small  indeed.  In  strong  contrast  with 
the  Shanghai-Nanking  terms  stand  those  of  the  Tientsin- 
Pukow  line,  presently  to  be  mentioned. 

Peking-Hankow  Railway.  American  financial  interests 
were  the  first  to  become  interested  in  the  construction  of 
this  line,  which  has  now  become  the  most  profitable  of 
all  the  Chinese  lines,  and  a  survey  was  made  under  the 
authority  of  United  States  Senator  Washburn.  When, 
however,  it  came  to  the  matter  of  a  contract  for  the  con- 
struction of  the  line,  a  Belgian  company,  the  Societe 
d 'Etudes  de  Chemins  de  Fer  en  Chine,  representing 
Belgian,  French  and  Russian  financial  interests,  obtained 
the  contract.  This  it  did,  however,  only  by  offering  to 
the  Chinese  terms  which  afterwards  the  company  found 
so  liberal  that  it  had  to  ask  of  the  Chinese  Government 
that  they  be  modified — a  request  which,  it  may  be 
observed,  was  backed  by  diplomatic  pressure.*'*  The 
agreement,  signed  June  26, 1898,  by  the  Belgian  Corpora- 
tion with  the  Chinese  Railway  Company,  a  Chinese  cor- 
poration,**  provided  for  a  loan  of  112,500,500  francs  to 
mature  in  twenty  years,  and  payments  of  interest  and 
refunding  of  bonds  to  be  guaranteed  by  the  gross 
revenues  of  the  Imperial  Chinese  Government.  Also 
there  was  specially  assigned,  preferentially,  *  *  all  the  net 

"There  is  ground  for  believing  that  this  Franco-Belgian-Russian  pro- 
ject was  but  part  of  an  ambitious  scheme  under  which  the  Russian  sphere 
in  the  north  would  be  ultimately  united  to  the  French  Sphere  in  the 
South.  In  this  connection,  then,  the  line  from  Hankow  to  Canton  was  of 
especial  significance. 

"Preliminary  contracts  had  been  signed  May  27,  and  July  21,  1897: 
for  translations  of  the  Loan  Contract  and  Operating  Contract,  see  Mac- 
Murray,  No.  1898/13. 


536      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

revenue  of  the  line  from  Lukoucliiao  (Peking)  to  Hankow, 
after  the  regular  payment  of  all  expenses  of  administra- 
tion and  operation."  Also  there  was  given  a  prior  special 
lien  on  the  line  itself  together  with  stationary  and  rolling 
stock. 

The  construction  of  the  entire  line  (not  including  the 
short  section  from  Peking  to  Paotingfu)  was  to  be  under 
the  direction  of  the  Belgian  company,  which  was  to 
**  make  plans,  surveys,  estimates  for  the  whole  line, 
direct  the  execution  of  all  the  work  and  order  the  mate- 
rials, machinery  and  furniture  necessary  to  insure  the 
regular  operation  of  the  line."  The  Chinese  Director- 
General  of  the  railway  company  was  to  have  the  right, 
however,  to  approve  the  building  plans  and  contracts  for 
supplies.  With  the  exception  of  what  could  be  supplied 
by  the  Hanyang  works,  all  materials  and  supplies  neces- 
sary for  the  construction  and  operation  of  the  road  were 
to  be  obtained  from  the  Belgian  company,  which  obli- 
gated itself  to  fill  all  orders  under  the  best  possible  terms. 
Upon  such  orders  the  Societe  was  to  receive  a  commis- 
sion of  five  per  cent. 

Under  an  operating  contract  of  even  date,  the  Belgian 
company  was  given  the  right  to  take  over  the  the  working 
of  each  section  of  the  line  as  soon  as  completed ;  to  hire 
and  dismiss  personnel;  to  fix  salaries;  and  to  make  all 
purchases  necessary  for  operating,  maintaining  or  repair- 
ing the  road ;  to  fix  rates ;  to  collect  revenues  of  all  kinds 
and  to  pay  the  operating  expenses — such  measures  being 
submitted  **  for  consultative  purposes  "  to  the  Chinese 
Director-General  of  the  Chinese  Railways.  During  the 
entire  period  of  its  operation  of  the  line  and  as  compen- 
sation therefor,  the  Belgian  Company  was  to  receive 


EAILWAY  LOANS  AND  FOREIGN  CONTROL      537 

twenty  per  cent,  of  the  net  profits,  that  is,  after  payment 
of  all  operating  expenses  and  bond  interest. 

The  line  was  opened  to  traffic  in  1905. 

By  Article  V  of  the  Loan  Agreement  the  Chinese  Gov- 
ernment was  given  the  right,  after  September  1,  1907,  to 
pay  off  the  entire  loan  and  bring  the  contract  to  an  end. 
Taking  advantage  of  this  right  the  Chinese  Government 
issued  two  loans,  dated  October  8,  1908,  secured  by 
certain  provincial  revenues,^'^  and  on  January  1,  1909, 
took  over  the  line,  the  Societe's  interest  in  it  thereupon 
wholly  terminating.  A  considerable  number  of  French 
and  Belgian  employees  have,  however,  been  retained  in 
the  service  and  the  line  is  still  spoken  of  as  the  French 
Railway. 

The  following  are  branches  of  the  Peking-Hankow 
main  line;  Liangsiang-Tuli  (12  miles  to  coal  mines); 
Liuliho-Choweichwang  (10  miles  to  coal  mines) ; 
Kaoyihsien  to  Lincheng  (10  miles  to  coal  mines;)  to 
Paotingfu  (3  miles) ;  Kaopeitien  to  Hsiling  (26  miles). 

Chengtingfu-Taiyuanfu  Railway.  This  road  is  a  branch 
of  the  Peking-Hankow  Railway,  and  was  built  under  a 
loan  agreement  of  October  15,  1902,  with  the  Russo- 
Chinese  Bank.^^  The  construction  of  the  road  was  vested 
in  the  Belgian  syndicate  of  the  Peking-Hankow  line,  its 
administration,  after  completion,  however,  being  taken 
over  by  the  Imperial  Chinese  Railway  Company.  The 
line  was  opened  to  traffic  in  1907.  In  1912  a  loan  of 
250,000,000  francs  was  obtained  from  the  Compagnie 

"MacMurray,  Nos.  1908/12,  and  1908/13. 

"  For  translations  of  this  and  of  the  accompanying  operating  contract, 
see  MacMurray,  No,  1902/8. 


538      FOREIGN"  RIGHTS  AND  INTERESTS  IN  CHINA 

Generale  de  Chemins  de  Fer  et  de  Tramways  en  Chine 
for  an  extension  of  the  line  westward  to  Lanchowfu  and 
eastward  to  Haichow  or  Suchowfn. 

Pienlo  Railway.  This  line,  120  miles  in  length,  crossing 
the  Peking-Hankow  Eailway,  runs  from  Kaifengfu  to 
Loyang  and  was  built  under  an  agreement  signed  Novem- 
ber 12, 1903,^^  with  a  representative  of  the  Belgian  Com- 
pagnie  Generale  de  Chemins  de  Fer  et  de  Tramways  en 
Chine,  under  which  a  loan  of  25,000,000  francs  was 
obtained,  secured  by  the  receipts  of  the  road  and  guar- 
anteed by  the  Chinese  Government.  The  conditions 
regarding  the  construction  and  management  of  the  road 
followed  those  of  the  Peking-Hankow  loan.  An  option 
was  granted  to  the  Belgian  company  to  extend  the  line 
to  Sianfu  in  Shensi. 

Chinese  Regulations  of  1898  for  Mines  and  Railways. 

In  reaction  against  the  inroads  that  foreigners  were 
making  upon  its  control  of  its  own  domestic  affairs,  the 
Chinese  Government  in  the  latter  part  of  1898  issued  a 
set  of  mining  and  railway  regulations  which  showed  a 
determination  upon  their  part  to  prevent  in  the  future, 
if  possible,  a  further  alienation  to  foreigners  of  rights 
of  control  over  the  mining  and  railway  interests  of  the 
country. 

These  regulations  declared  that  the  best  form  of 
managing  mines  and  railways  was  by  merchants  and  that 
henceforth  the  leading  idea  should  be  to  bring  this  about. 
Mining  and  railway  matters  in  the  three  Manchurian 

"For  translations  of  loan  contract  and  operating  contract,  see  Mac- 
Murray,  No.  1903/7. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      539 

Provinces,  in  Shantung  and  at  Lungchou,  it  was  stated, 
should  not  be  invoked  as  precedents,  as  those  conces- 
sions had  been  affected  with  international  questions. 
Mines  and  railways  were  declared  to  be  essentially 
separate  undertakings  and  to  be  treated  as  such. 

In  securing  capital,  the  Regulations  ran,  every  effort  must  be 
made  to  get  the  largest  proportion  possible  of  Chinese.  Regardless 
of  the  way  the  scheme  is  put  on  the  mlarket,  the  lump  sum  needed 
for  the  undertaking  must  be  estimated,  and  then  must  be  in  the 
first  place  secured,  as  a  basis  of  operations,  three-tenths  of  this 
amount  by  Chinese.  Only  when  this  has  been  done  may  foreigners 
be  invited  to  buy  shares  or  foreign  money  be  borrowed.  If  there 
is  no  proportion  of  the  capital  furnished  by  Chinese  and  if  there 
is  only  stock  bought  by  foreigners  or  foreign  capital  lent,  no  sanc- 
tion wiU  be  given. 

In  ord^r  to  protect  the  sovereign  rights  of  China,  it 
was  declared  that  the  administrative  control  of  all  mines 
and  railways,  irrespective  of  the  foreign  shares  or  the 
amount  of  foreign  capital  involved,  should  remain  in  the 
hands  of  Chinese  merchants.  These  provisions,  like  the 
mining  regulations  based  on  the  1903  Treaties,  have  not 
been  enforced. 

Canton-Eowloon  Railway.  This  railway  from  Canton 
to  Kowloon  is  composed  of  two  sections:  one  from 
Kowloon  to  Samchun,  the  border  of  British  territory, 
twenty-two  miles  in  length,  built  by  the  Hongkong  Gov- 
ernment and  opened  to  traffic  in  1910;  and  the  other 
from  Samchun  to  Canton,  a  distance  of  approximately 
ninety  miles,  built  by  the  Chinese  Government  with 
money  loaned  by  the  British  and  Chinese  Corporation.^^ 

*"  For  the  text  of  the  loan  contract,  dated  March  7,  1907,  see  MacMurray, 
No.  1907/2.  The  right  to  finance  the  building  of  this  road  was  one  of  those 
demanded  and  obtained  by  Great  Britain  from  China  aa  an  equivalent  for 


540      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

The  terms  under  which  the  loan  of  £1,500,000  was  made 
by  the  Hongkong  Government  to  China  for  the  building 
of  the  railway  from  the  boundary  of  the  Kowloon  leased 
territory  to  the  city  of  Canton  need  to  be  set  forth  with 
some  degree  of  particularity  since  they  provided  for  a 
distinct  type  of  foreign  control,  as  distinguished,  for  ex- 
ample, from  those  of  the  Tientsin-Pukow  Railway  loan 
agreement,  presently  to  be  considered. 

Chinese  Government  bonds,  maturing  in  thirty  years, 
were  to  be  issued  for  the  full  amount  of  the  loan,  with 
the  Railway  as  mortgage  security,^^  the  proceeds  to  be 
used  for  the  construction  and  equipment  of  the  road  and 
for  paying  interest  on  the  loan  during  construction.  In 
all  matters  relating  to  construction  particular  heed  was 
to  be  paid  to  the  opinions  and  habits  of  the  Chinese  peo- 
ple and,  when  practicable,  Chinese  were  to  be  employed 
in  positions  of  trust  and  responsibility.  There  was  to 
be  established  at  Canton  by  the  Viceroy  of  Canton  a 
Head  Office  under  the  direction  of  a  Chinese  Managing 
Director  (appointed  by  the  Viceroy)  with  whom  was  to 
be  associated  a  British  Engineer-in-Chief,  and  a  British 
Chief  Accountant,  reconunended  by  the  Corporation  and 
approved  by  the  Viceroy. 


granting  to  a  Belgian  syndicate  the  concesBion  for  the  important  line 
from  Peking  to  Hankow — the  Belgian  syndicate  being  supposed  to  act  as 
the  agent  of  France  and  her  ally  Russia.  A  preliminary  agreement  for  the 
building  of  the  line  had  been  signed  in  1898,  but  nothing  was  done  under  it. 
** "  Art.  3.  The  loan  shall  be  secured  by  mortgage  declared  to  be  now 
entered  into  in  equity  by  virtue  of  this  Agreement,  and  shall,  as  soon  aa 
possible  hereafter,  be  secured  by  a  specific  and  legal  first  mortgage  in  favor 
of  the  Corporation  upon  all  lands,  materials,  rolling  stock,  buildings, 
property,  and  premises,  of  every  description  purchased  or  to  be  purchased 
for  the  Railway,  and  on  the  Railway  itself,  as  and  when  constructed,  and 
on  the  revenue  of  all  description  derivable  therefrom." 


EAILWAY  LOANS  AND  FOREIGN  CONTROL       541 

For  all  important  technical  appointments  on  the  Rail- 
way staff,  Europeans  of  experience  and  ability  were  to 
be  engaged,  but  should  competent  Chinese  be  available 
they  also  were  to  be  employed.  All  receipts  and  pay- 
ments were  to  be  certified  by  the  Chief  Accountant  and 
authorized  by  the  Managing  Director. 

As  remuneration  for  all  services  to  be  rendered  by  it 
during  construction,  including  superintendence  of  the 
purchase  of  materials,  the  Corporation  was  to  receive 
£35,000.  As  compensation  for  acting  as  trustees  of  the 
bondholders,  the  Corporation  was  to  receive  annually  a 
further  sum  of  £1,000. 

In  case  there  should  be  default  upon  the  part  of  the 
Chinese  Government  in  the  payment  of  interest  or  the 
principal  of  the  loan  in  accordance  with  the  amortization 
scheme  that  was  annexed  to  the  loan  agreement,  it  was 
provided  that  the  Railway  with  all  its  appurtenances 
should  be  handed  over  to  the  Corporation  to  be  dealt 
with  in  such  a  manner  as  to  protect  the  interests  of  the 
bondholders. 

The  severity  of  these  terms  is  sufficiently  evident,  es- 
pecially when  contrasted  with  those  obtained  by  the 
Chinese  Government  for  the  building  of  the  Tientsin- 
Pukow  line. 

Tientsin-Pukow  Railway.  The  final  agreement  for  the 
construction  of  this  line  which  brought  Tientsin,  and 
therefore  Peking  and  the  north,  into  connection  with 
Nanking  (across  the  Yangtze  from  Pukow)  and  Shang- 
hai, was  the  product  of  much  discussion  between  British 
and  German  interests  which  has  been  somewhat  consid- 
ered earlier  in  this  volume,  in  the  chapters  dealing  with 


542      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

the  development  in  China  of  Spheres  of  Interest.  It  will, 
however,  be  worth  while  to  say  a  further  word  regarding 
this  conflict  of  British  and  German  interests  in  view  of 
the  fact  that  from  it  resulted  the  granting  to  the  Chinese 
Government  of  terms  for  railway  construction  more  favor- 
able than  it  had  previously  been  able  to  obtain,  and  which 
terms  it  was  able  to  use  as  norms  for  later  railway  loan 
agreements. 

It  will  be  remembered  that  previous  to  1898  the  British 
and  German  financial  interests  operating  in  China  had 
agreed  to  pool  all  Chinese  loans.  This  agreement  was 
abrogated  in  1898,  with  regard  at  least  to  railway  con- 
cessions, but,  by  a  definite  understanding  arrived  at  in 
London  in  September  of  that  year,  it  had  been  agreed 
that  the  English  "Sphere"  should  embrace:  **  The 
Yangtze  Valley  subject  to  the  connection  of  the  Shantung 
lines  to  the  Yangtze  at  Chinkiang;  the  provinces  south 
of  the  Yangtze;  the  Province  of  Shansi  with  connection 
to  the  Peking-Hankow  line  at  a  point  south  of  Chengting 
and  a  connecting  line  to  the  Yangtze  Valley  crossing  the 
Hoangho  Valley."  The  German  "  Sphere"  was  to  in- 
clude; **  The  Province  of  Shantung  and  the  Hoangho 
Valley  with  connection  to  Tientsin  and  Chengting,  or 
other  point  of  the  Peking-Hankow  line,  in  the  south  with 
connection  to  the  Yangtze  at  Chingkiang  or  Nanking. 
The  Hoangho  Valley  is  understood  to  be  subject  to  the 
connecting  line  to  the  Yangtze  Valley,  also  belonging  to 
the  said  sphere  of  interest." 

Previously  to  entering  into  this  understanding  the  Ger- 
man Minister  at  Peking  had  informed  the  British  Min- 
ister that  he  had  been  instructed  by  his  Government: 
**  Should  the  Chinese  Government  decide  to  grant  a  con- 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      543 

cession  for  the  Tientsin-Cliinkiaiig  22  Eailway  regardless 
of  German  claims,  you  are  instmcted  to  oppose  such  a 
decision,  and,  should  it  be  necessary,  you  may  inform  the 
Chinese  Government  that  the  German  Government  would 
consider  as  non  avenu  any  concession  in  that  Province, 
and  would  reserve  the  right  of  making  the  Chinese  Gov- 
ernment responsible  for  any  such  concession  in  the  event 
of  its  being  granted  by  them. ' '  ^^ 

The  first  agreement  relating  to  the  construction  of  the 
Tientsin- Chinkiang  (later  changed  to  Pukow)  line  was 
entered  into  on  May  18,  1899,  between  the  Chinese  Gov- 
ernment and  the  Deutsch-Asiatische  Bank,  and  the  Hong- 
kong and  Shanghai  Banking  Corporation  for  themselves 
and  on  behalf  of  Jardine,  Matheson  and  Co.  as  joint 
agents  for  the  British  and  Chinese  Corporation.^^  This 
contract,  however,  was  not  carried  out  at  the  time  owing 
to  the  Boxer  troubles  of  1900,  and  the  matter  was  not 
again  discussed  until  1906,  by  which  time  the  Chinese 
had  developed  for  themselves  a  new  railway  policy  ac- 
cording to  which,  in  the  future,  lines  should  be  con- 
structed under  Chinese  direction,  although  the  funds 
needed  might  be  obtained  from  foreign  sources.  In  the 
new  negotiations  entered  upon,  the  British  strongly 
insisted  that  the  Tientsin-Pukow  terms  should  corre- 
spond to  those  embodied  in  the  Canton-Kowloon  agree- 
ment. The  German  interests,  however,  made  this  im- 
possible by  offering  much  more  liberal  conditions,  with 
the  final  result  that  these  terms  were  accepted  by  the 

**  Chinkiang  is  a  point  on  the  Yangtze  near  Nanking  and  Pukow. 
"British  Pal.  Papers,  "China,"  No.  1,  18ff9    (vol.  cix.  No.  305).     Cf. 
Overlach,  Foreign  Financial  Control  in  China,  pp.  35-36. 
**MacMurray,  No.  1908/1,  note. 


644     FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

British  for  the  portion  of  the  line  which  they  were  to 
finance  as  well  as  for  the  portion  to  be  built  under  Ger- 
man auspices.  In  effect,  as  will  be  seen,  the  loan  was  to 
be  secured  by  specified  provincial  revenues,  and  not  by  a 
mortgage  upon  the  railway  and  its  appurtenances,  and 
the  construction  and  control  of  the  road  was  to  be  wholly 
in  Chinese  hands. 

By  the  final  agreement,  signed  January  13,  1908,^^ 
between  the  Imperial  Chinese  Government  of  the  one 
part  and  the  Deutsch-Asiatische  Bank  and  the  Chinese 
Central  Railways,  Ltd.  representing  British  financial 
interests,  of  the  other  part  (and  thereafter  referred  to 
as  the  Syndicate)  it  was  provided  that  the  line  from 
Tientsin  to  Pukow  should  be  divided  into  two  sections; 
the  northern  section  from  Tientsin  to  Hanchwang,  390 
miles,  to  be  built  under  German  supervision;  and  the 
southern  section  from  Hanchwang  to  Pukow  to  be  built 
under  British  supervision, — the  two  sections  after  con- 
struction to  be  operated  as  a  single  line. 

The  Agreement  authorized  the  issuance  of  a  thirty 
year  loan  of  £5,000,000,  the  proceeds  to  provide  capital 
for  the  construction  of  a  government  railway  from  Tien- 
tsin through  Techow  and  Tsinanfu  to  Ihsien  near  the 
southern  frontier  of  Shantung  to  be  known  as  the  north- 
ern section;  and  from  Ihsien  to  Pukow,  to  be  known  as 
the  southern  section  of  the  Tientsin-Pukow  line. 

For  the  payment  of  the  loan  and  interest  charges 
thereon,  the  Chinese  Government  assumed  responsibility 
and  engaged,  should  the  revenues  of  the  proposed  rail- 
way prove  insufiicient,  to  take  steps  to  make  good  the 
deficiency.    As  specific  security  the  following  revenues 

*  For  treaty,  see  MacMurray,  No.  1908/1. 


EAILWAY  LOANS  AND  FOEEIGN  CONTEOL      545 

were  pledged:  (1)  The  likin  and  internal  revenues  of  the 
Province  of  Chihli  to  the  amount  of  1,200,000  Haikuan 
taels  a  year;  (2)  the  likin  and  internal  revenues  of  the 
Province  of  Shantung  to  the  amount  of  1,600,000  Haikuan 
taels  a  year,  and  (3)  the  revenue  of  the  Nanking  likin 
collectorate  to  the  amount  of  900,000  Haikuan  taels  a 
year  and  of  the  Huai-an  native  customs  in  the  Province 
of  Kiangsu,  to  the  amount  of  100,000  Haikuan  taels  a 
year.  These  provincial  revenues  were  declared  to  be 
free  from  all  other  loans,  charges,  or  mortgages.  These 
revenues  were  not  to  be  interfered  with,  however,  so  long 
as  the  principal  and  interest  of  the  loan  were  regularly 
paid.  If  it  became  ncessary  to  resort  to  them,  they  were 
to  be  transferred  to  and  administered  by  the  Imperial 
Maritime  Customs  in  the  interest  of  the  bondholders. 
Until  the  loan  should  be  redeemed  the  railway  should, 
under  no  circumstances,  be  mortgaged  or  its  receipts 
given  as  security  to  any  other  party.  It  was  further  pro- 
vided that  should  the  customs  tariff  be  revised  and  in 
connection  therewith  the  likin  tax  be  decreased  or  abol- 
ished, the  consent  of  the  lending  interests  to  such  de- 
crease or  abolition  should  first  be  obtained  and  then  only 
upon  condition  that  an  equivalent  charge  upon  the 
increase  in  customs  revenues  were  substituted. 

The  proceeds  of  the  loan  were  to  be  paid  to  the  credit 
of  a  separate  account  from  which  payments  were  to  be 
made  to  meet  construction  expenditures.  The  accounts 
of  the  railway  were  to  be  kept  in  Chinese  and  English 
in  accordance  with  accepted  modern  methods  and  sup- 
ported by  necessary  vouchers. 

The  construction  and  control  of  the  railway  was  to  be 
entirely  vested  in  the  Imperial  Chinese  Government,  but 
35 


546      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

for  the  northern  section  a  German  Chief  Engineer,  and 
for  the  southern  section  a  British  Engineer,  acceptable 
to  the  British  and  German  syndicate,  were  to  be  ap- 
pointed. These  two  Engineers  were  to  be  under  the 
orders  of  the  Managing  Director.  TecTinical  employees 
on  the  railway  staff  were  to  be  appointed  and  dismissed 
by  the  Managing  Director  but  in  consultation  with  the 
Chief  Engineers,  and,  in  case  of  disagreement,  the  mat- 
ter was  to  be  referred  to  the  Director-General  whose 
decision  was  to  be  final. 

** After  completion  of  construction,"  the  Agreement 
ran,  *'  the  Imperial  Chinese  Government  will  administer 
both  sections  as  one  undivided  Government  railway  and 
wiU  appoint  an  Engineer-in- Chief,  who,  during  the  period 
of  the  loan,  shall  be  a  European — without  reference  to 
the  Syndicate." 

For  the  northern  section  the  Deutsch-Asiatische  Bank 
was  to  act  as  the  purchasing  agent  during  the  construc- 
tion of  the  line  for  all  goods  imported  from  abroad ;  and 
for  the  southern  section  the  Chinese  Central  Railways, 
Ltd.  was  to  act  in  a  similar  capacity.  Upon  such  pur- 
chases, which  were  to  be  made  in  the  open  market  and 
upon  the  best  possible  terms,  a  Commission  of  five  per 
cent,  on  the  net  cost  was  to  be  received,  but  no  expendi- 
tures were  to  be  incurred  without  the  authorization  of 
the  Managing  Director.  At  equal  rates  and  qualities, 
goods  of  German  and  British  manufacture  were  to  be 
given  preference  over  goods  of  other  foreign  countries; 
and  Chinese  goods  when  obtainable  and  of  equal  price 
and  qualities  were  to  be  preferred  to  goods  of  British  or 
German  origin.  No  commission  was  to  be  paid  on  pur- 
chases of  Chinese  goods.    After  the  completion  of  the 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      547 

construction  of  the  line  the  Deutsch-Asiatische  Bank  and 
the  Chinese  Central  Railways  were,  within  their  respect- 
ive sections,  to  be  given  the  preference,  during  the  cur- 
rency of  the  loan,  of  agency  business  for  the  purchase  of 
foreign  materials  for  the  railway.  Also  these  companies 
were  to  have  first  option  of  supplying  future  loans,  if 
foreign  capital  should  be  needed,  to  build  branch  lines  in 
connection  with  the  main  line. 

Under  the  earler  preliminary  agreement  it  had  been 
provided  that,  in  remuneration  for  their  general  respon- 
sibility and  services,  the  Syndicate  should  receive  twenty 
per  cent,  of  the  net  profits  of  the  railway.  In  commuta- 
tion of  this,  the  Syndicate,  in  the  final  agreement,  con- 
sented to  retain  £200,000  out  of  the  first  issue  of  the  loan. 

Under  these  conditions  for  the  first  time  in  the  history 
of  foreign  railway  loans  in  China,  the  construction  and 
operation  of  the  financed  line  were  placed  wholly  in 
Chinese  hands.  Furthermore,  no  mortgage  was  placed 
upon  the  line.  Foreign  Engineers-in-Chief  were  to  be 
appointed  and  construction  accounts  were  to  be  kept  and 
rendered,  but  withdrawals  from  the  railway  credit 
created  by  the  loan  could  not  be  stopped  at  the  instance 
of  the  foreign  financial  interests  concerned,  as  had  been 
the  case  under  earlier  railway  loan  agreements.^' 

Shanghai-Hangchow-Ningpo  Railway.  Conditions  simi- 
lar to  the  *  *  Pukow  Terms  ' '  were  secured  by  the  Chinese 
Government  by  the  agreement  of  March  6,  1908,  under 
which  the  Shanghai-Hangchow-Ningpo  Railway  was 
constructed.^''^ 

**  Considerable  "  graft "  and  extravagance  upon  the  part  of  the  Chinese 
resulted  from  the  freedom  from  control  thus  permitted. 
*  This  line  is  composed  of  two  disconnected  sections :  one  from  Shanghai 


&48      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

This  agreement  was  with  the  British  and  Chinese  Cor- 
poration and  provided  for  a  thirty-year  loan  of  £1,500,000 
the  purpose  being  declared  to  be  the  building  of  a  line 
from  a  point  connecting  with  the  Shanghai-Nanking 
line  at  or  near  Shanghai,  through  Fengchingchen  to 
Kahsingfu,  thence  to  Hashu  and  Hangchow,  and  thence 
from  Chiangkow  to  Ningpo,  on  which  latter  line  certain 
work  had  already  been  locally  attempted.  As  security 
for  the  loan  were  pledged  the  revenues  of  the  railway 
together  with  the  surplus  earnings  of  the  Imperial  Kail- 
ways  of  North  China  (excluding  the  section  of  the 
line  to  the  east  of  the  Liao  River),  and  if  these  should 
prove  insufficient,  the  Chinese  Government  was  to  pro- 
vide other  revenues.  Similar  to  the  Tientsin-Pukow 
arrangement,  the  construction  and  control  of  the  railway 
was  to  be  entirely  in  the  Chinese  Government,  but  with 
the  proviso  that  a  British  Engineer-in-Chief  should  be 
appointed.  In  other  respects  also,  as,  for  example,  the 
purchase  of  materials,  etc.,  the  Pukow  terms  were 
followed. 

This  Shanghai-Hanchow-Ningpo  line  has  had  a  consid- 
erable history:  "  Nationalization  "  by  the  Provinces  of 
Kiangsu  and  Chekiang ;  mortgage  in  part  to  the  Japanese 
firm  of  Okura  &  Co.  as  security  for  a  loan  of  Yen  3,000,000 
to  the  Nanking  Provisional  Government;  the  mortgage 
redeemed  by  funds  obtained  from  the  British  and  Chinese 
Corporation ;  and,  ultimately,  provincial  control  resumed. 
The  scope  of  the  present  chapter  does  not,  however,  make 
it  necessary  to  give  this  history.^^ 

to  Hangchow    (Zahkao),   160  miles  in  length;    and  one   from   Ningpo  to 
Shaoshing,  48  miles  in  length.    There  is  an  unbuilt  gap  from  Shaoshing  to 
Hangchow.    There  is  a  branch  line  of  six  miles  from  Hangchow  to  Konzen- 
chiao.    For  text  of  loan  agreement,  see  MacMurray,  No.  1908/3. 
"See  MacMurray,  notes  to  No.   1908/3. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL       549 

Canton-Hankow  Railway..  The  project  of  uniting 
Hankow  to  Canton  by  rail  and  thus  giving  a  continuous 
rail  route  from  the  extreme  north  of  China  to  its  southern 
border  has  not  yet  been  achieved,  but  considerable  por- 
tions of  the  section  between  Hankow  and  Canton  have 
been  constructed  and  are  now  in  operation.  The  history 
of  the  diplomatic  negotiations  with  regard  to  this  line 
are  of  sufficient  interest  to  justify  an  outline  statement 
of  them. 

The  original  concession  for  the  line  was  granted  by 
contracts  signed  April  14,  1898,  and  July  13,  1900,  to  an 
American  syndicate — the  American  China  Development 
Company — of  which  Mr.  Calvin  S.  Brice  was  the  leading 
spirit.  It  seems  clear  that  a  considerable  motive  leading 
the  Chinese  to  grant  this  concession  was  that  it  had 
no  apprehensions  regarding  the  political  ambitions  of 
America,  and,  therefore,  in  a  subsidiary  undertaking,  it 
was  agreed  that  the  company  should  remain  an  American 
company.  This  undertaking,  as  given  in  Article  XVII 
of  the  agreement  of  July  13,  1900,  was  that ' '  the  Ameri- 
cans cannot  transfer  the  rights  of  these  agreements  to 
other  nations  or  people  of  other  nationality."  However, 
in  spite  of  this  provision,  the  American  company  per- 
mitted a  majority  of  its  stock  to  get  into  Belgian  hands 
by  purchase  in  open  market,  with  the  result  that  the 
control  of  the  company  came  into  their  hands,  the  Ameri- 
can president  of  the  company  was  deposed,  and  American 
engineers  in  China  on  the  railway  line  were  superseded 
by  Belgians.  Thereupon  the  Chinese  Government  served 
notice  upon  the  American  Government  that  the  conces- 
sion was  annulled.  This  action  was  not  acquiesced  in  by 
the  American  Government  and  a  long  diplomatic  contro- 


550      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

versy  arose.  In  result,  the  banking  firm  of  J.  P.  Morgan 
&  Company,  acting  as  agents  of  the  American  company, 
bought  back  the  shares  held  by  the  Belgians,  and  the 
Chinese  Government  then  bought  out  the  American 
interests.  The  terms  of  this  settlement  were  very  onerous 
to  the  Chinese  for  they  were  compelled  to  pay  some 
$6,750,000,  which  was  $3,750,000  in  excess  of  what  the 
Americans  had  spent.  The  agreement  by  which  this 
repurchase  was  effected  was  dated  August  29,  1905.^^ 

Hukuang  Loan.  In  June,  1906,  the  building  of  the  road 
was  turned  over  to  merchants  of  the  provinces  through 
which  it  was  to  pass — ^Kwangtung,  Hunan,  and  Hupeh. 
Under  private  auspices  some  10,000,000  taels  was  spent 
with  but  thirty-five  miles  of  poorly  constructed  and 
poorly  equipped  line  to  show  for  it.  It  became  evident 
that  the  Imperial  Government  would  have  to  reassume 
control  of  the  project  and  again  to  solicit  foreign  finan- 
cial aid.  This  the  Peking  Government  did,  and  began 
negotiations  with  the  French,  German,  and  British  banks, 
whereupon  the  American  Government  asserted  that  it 
possessed  a  right  to  participation  in  the  proposed  loan — 
a  right  based  upon  promises  dating  from  1903  and  1904, 
made  by  the  Chinese  Government. 

In  pressing  this  American  claim  to  participation,  the 
American  President,  Mr.  Taft,  took  the  step,  extraordi- 
nary from  the  diplomatic  point  of  view,  of  communicat- 
ing personally  and  directly  with  the  head  of  the  Chinese 


"The  original  concession  to  the  American  company  included  the  right  to 
build  a  railway  from  Canton  to  Fatshan  and  Samshui.  This  short  line  of 
12  miles  was  completed  in  1904.  Another  branch  of  the  line  from  Chuchou 
to  Pinghfiiang,  65  miles  in  length,  was  built  and  opened  to  traffic  in  1902. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      551 

Government,  Prince  Regent  Chun.    In  a  telegram,  dated 
July  15,  1909,  to  Prince  Chun,  President  Taft  said: 

I  am  disturbed  at  the  report  that  there  is  certain  prejudiced 
opposition  to  your  Government's  arranging  for  equal  participation 
by  American  capital  in  the  present  railway  loan.  To  your  wise 
judgment  it  will  of  course  be  clear  that  the  wishes  of  the  United 
States  are  based  not  only  upon  China's  promises  of  1903  and  1904, 
confirmed  last  month,  but  also  upon  broad  national  and  impersonal 
principles  of  equity  and  good  policy  in  which  a  regard  for  the  best 
interests  of  your  country  has  a  prominent  part.  I  send  this  message 
not  doubting  that  your  reflection  upon  the  broad  phases  of  this 
subject  will  at  once  have  results  satisfactory  to  both  countries.  I 
have  caused  the  Legation  to  give  your  minister  for  foreign  affairs 
the  fullest  information  on  the  subject.  I  have  resorted  to  this 
somewhat  unusually  direct  communication  with  Your  Imperial 
Highness,  because  of  the  high  importance  that  I  attach  to  the  suc- 
cessful result  of  our  present  negotiations.  I  have  an  intense  per- 
sonal interest  in  making  the  use  of  American  capital  in  the  devel- 
opment of  China  an  instrument  for  the  promotion  of  the  welfare 
of  China,  and  an  increase  in  her  material  prosperity  without  en- 
tanglements or  creating  embarrassments  affecting  the  growth  of  her 
independent  political  power  and  the  preservation  of  her  territorial 
integrity. 

In  a  statement  given  to  the  press  on  January  6,  1910, 
reviewing  the  general  policy  of  the  United  States  in 
China  as  indicated  not  only  by  the  Hukuang  loan,  the 
Chinchow-Aigun  project,  and  the  Manchurian  railways 
neutralization  scheme,  the  American  Secretary  of  State, 
referring  especially  to  the  direct  message  of  President 
Taft  to  the  Prince  Regent  of  China,  said: 

The  grounds  for  this  energetic  action  on  the  part  of  the  United 
States  Government  have  not  been  generally  understood.  Railroad 
loans  floated  by  China  have  in  the  past  generally  been  given  an 
impartial  guaranty  and  secured  by  first  mortgages  on  the  lines 


552      FOKEIGN  EIGHTS  AND  INTERESTS  IN  CHINA 

constructed  or  by  pledging  provincial  revenues  as  security.  The 
proposed  hypothecation  of  China's  internal  revenues  for  a  loan  [the 
Hukuang  Loan]  was  therefore  regarded  as  involving  important 
political  considerations.  The  fact  that  the  loan  was  to  carry  an 
imperial  guaranty  and  be  secured  on  the  internal  revenues  made  it 
of  the  greatest  importance  that  the  United  States  should  participate 
therein  in  order  that  this  Government  might  be  in  a  position  as  an 
interested  party  to  exercise  an  influence  equal  to  that  of  any  of  the 
other  three  Powers  in  any  question  arising  through  the  pledging  of 
China's  national  resources,  and  to  enable  the  United  States,  more- 
over, at  the  proper  time  again  to  support  China  in  urgent  and 
desirable  fiscal  administrative  reforms,  such  as  the  abolition  of 
likin,  the  revision  of  the  customs  tariff  and  general  fiscal  and 
monetary  rehabilitation. 

The  statement  then  goes  on  to  say,  that  there  were  still 
stronger  reasons  for  the  action  that  had  been  taken, 
namely,  as  '*  the  first  step  in  a  new  phase  of  the  tradi- 
tional policy  of  the  United  States  in  China  and  with 
special  reference  to  Manchuria."  The  **  neutralization  " 
scheme  is  then  explained  and  the  reasons  for  it  outlined. 

When  the  agreements  or  promises  which  China  was 
alleged  to  have  made  to  America  were  made  public,  they 
were  shown  to  be  by  no  means  strong  and  unequivocal. 
It  appeared  that  China  had  promised  nothing  more  than 
to  consult  with  American  capitalists  if  foreign  loans  were 
solicited.  Furthermore,  that,  on  several  occasions,  when 
American  financiers  had  been  approached  by  the  British 
bankers  who  were  interested  in  the  proposed  loan,  with 
a  view  to  American  participation,  no  reply  had  been 
returned.'** 

However,  on  May  23,  1910,  an  agreement  was  reached 
in  a  conference  held  at  Paris  between  the  representatives 

••  See  17.  fi.  For.  Rels.,  1909. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      553 

of  the  British,  French,  German  and  American  banks,  for 
American  participation  in  the  Hukuang  loan,  and  on  May 
20,  1911,  the  loan  agreement  with  China  was  signed  by 
the  four  banking  groups.^^ 

According  to  this  agreement  the  loan  was  to  be  for 
£6,000,000  to  run  for  forty  years  and  the  proceeds  to  be 
devoted  to  the  payment  of  $2,222,000,  American  currency, 
of  bonds  that  had  been  issued  by  the  American  China 
Development  Company  on  behalf  of  the  Chinese  Gov- 
ernment, and  to  the  construction:  (1)  of  a  Chinese 
Government  railway  main  line  from  Wuchang  (across 
the  Yangtze  from  Hankow)  through  Yochow  and 
Changsha  to  a  point  on  the  southern  boundary  of  the 
Province  of  Hunan,  there  connecting  with  the  Kwang- 
tung  section  of  the  Canton-Hankow  Railway,  an  esti- 
mated distance  of  900  kilometers ;  and  (2)  of  a  Govern- 
ment main  line  from  a  point  at  or  near  Kuangshui  in 
the  Province  of  Hupei,  connecting  with  the  Peking- 
Hankow  line  and  passing  through  Hsiangyang  and 
Chingmenchow  to  Ichang,  an  estimated  distance  of  600 
kilometers;  and  (3)  a  line  from  Ichang  to  Kueichowfu 
in  the  Province  of  Szechuan,  an  estimated  distance  of  300 
kilometers.^2  The  first  line  was  designated  as  the  Hupei- 
Hunan  section  of  the  Canton-Hankow  line;  and  the  sec- 
ond line  as  the  Hupei  section  of  the  Szechuan-Hankow 
line.    The  agreement  provided  that  the  lines  of  railway 

•*  The  Deutsch-Asiatische  Bank,  the  Hongkong  and  Shanghai  Banking 
Corporation,  the  Banque  de  I'lndo  Chine,  and  the  American  group,  consist- 
ing of  J.  P.  Morgan  &  Co.,  Kiihn,  Loeb  &  Co.,  the  First  National  Bank  and 
the  National  City  Bank,  all  of  New  York  City.  For  the  text  of  the 
Hukuang  loan  agreement,  see  MacMurray,  No.  1911/5;  the  Inter-Bank 
agreement  is  therewith  printed  in  a  note. 

•*  This  latter  section  was  in  substitution  for  the  branch  line  from  Ching- 
menchow to  Hanyang,  originally  agreed  upon  by  the  Chinese  Government. 


554      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

already  constructed  by  the  two  Provinces  of  Hupei  and 
Hunan  should  be  taken  over  and  incorporated  in  the 
Canton-Hankow  and  Szechuan-Hankow  Government 
Railway  Administration. 

As  security  it  was  provided  that  the  loan,  principal 
and  interest,  should  constitute  a  first  charge  upon:  (1) 
the  Hupei  General  Likin,  (2)  the  Hupei  Additional  Salt 
Tax  for  River  Defense,  (3)  the  Hupei  New  Additional 
Two  Cash  Salt  Tax  of  September,  1908,  (4)  the  Hupei 
collection  of  the  Hukwang  inter-provincial  tax  on  rice, 
(5)  the  Hunan  General  Likin,  and  (6)  the  Hunan  Salt 
Commissioner's  Treasury  Regular  Salt  Likin.  These 
provincial  revenues  were  declared  to  amount  to  a  total 
of  5,200,000  Haikwan  taels  a  year,  and  to  be  free  from 
all  other  loans,  charges,  or  mortgages.  These  provincial 
revenues  were,  however,  not  to  be  levied  upon  unless 
necessary.  Primarily,  capital  payments  upon  the  loan 
and  interest  charges  were  to  be  met  from  the  revenues 
of  the  railways,  and  the  Chinese  Government  undertook, 
in  case  these  should  prove  insufficient  for  the  purpose, 
to  make  arrangements  to  ensure  payment  from  other 
sources.  If  it  should  become  necessary  to  resort  to  the 
provincial  revenues,  they  were,  to  the  extent  required, 
to  be  transferred  to  and  administered  by  the  Imperial 
Maritime  Customs. 

The  proceeds  of  the  loan  were  to  be  placed  to  the  credit 
of  a  *  *  Hukuang  Government  Railway  Account ' '  in  desig- 
nated foreign  banks,  payments  therefrom  to  be  made 
in  accordance  with  periodical  construction  accounts 
furnished  by  the  Chinese  Ministry  of  Posts  and  Com- 
munications, these' accounts  to  be  kept  in  Chinese  and 
English  in  accordance  with  accepted  modem  methods. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL       555 

supported  by  all  necessary  voueliers,  and  open  at  all 
times  to  inspection  by  auditors  appointed  and  paid  by 
the  banks,  and  obligated  to  satisfy  the  banks  as  to  the 
due  expenditure  of  the  loan  funds. 

As  regards  *'  control,'*  the  agreement  provided  that 
the  construction  and  control  of  the  lines  should  be 
*  *  entirely  and  exclusively  vested  in  the  Imperial  Chinese 
Government,"  but  that  that  Government  should  select 
for  appointment  a  British  Engineer-in-Chief  for  the 
Hupei-Hunan  section  from  Wuchang  to  Yichang-hsien, 
a  German  Engineer-in-Chief  for  the  Kuangshui-Ichang 
section  of  the  Szechuan-Hankow  line,  and  an  American 
Engineer-in-Chief  for  the  section  from  Tchang  to 
Kueichoufu — ^these  appointments  to  be  approved  by  the 
banks.  These  engineers  were  to  be  under  the  orders  of 
the  Director-General  and  the  Managing  Director  of  the 
lines  and  were  to  carry  out  the  wishes  of  the  Ministry  of 
Posts  and  Communications.  Appointments  and  dis- 
missals of  technical  members  of  the  railway  staffs  were 
to  be  made  by  the  Director-General  and  Managing  Direc- 
tor in  consultation  with  the  Engineers-in-Chief.  After 
completion  of  the  construction,  and  during  the  currency 
of  the  loan,  the  Chinese  Government  was  to  continue  to 
employ  Europeans  and/  or  Americans  as  Engineers-in- 
Chief. 

For  the  Hupei-Hunan  section  of  the  Canton-Hankow 
line  the  British  and  Chinese  Corporation,  and  for  the 
Hupei  section  of  the  Szechuan-Hankow  line  the  Deutsch- 
Asiatische  Bank,  were  to  act  as  agents  for  the  purchase 
of  all  materials,  plant  and  goods  required  to  be  imported 
from  abroad.  Rails  and  other  accessories  were  to  be 
obtained  from  the  Hanyang  Iron  "Works.    A  commission 


556      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

of  five  per  cent,  was  to  be  paid  on  all  purchases  made 
through  the  British  and  Chinese  Corporation  and  the 
Deutsch-Asiatische  Bank — ^these  purchases  to  bo  made  in 
open  market  at  the  lowest  rates  obtainable.  However, 
**  with  a  view  to  the  encouragement  of  Chinese  indus- 
tries," preference  was  to  be  given,  at  equal  prices  and 
qualities,  to  Chinese  materials  and  goods  manufactured 
in  China,  over  British,  French,  German,  American  or 
other  foreign  goods. 

The  following  option  for  supplying  additional  funds, 
if  needed,  was  given  the  contracting  banks : 

Article  XIX.  Should  the  Imperial  Chinese  Government  itself 
hereafter  consider  it  desirable  to  construct  extensions  in  connection 
with  the  railway  Unes  named  in  Article  II  of  this  agreement  in 
order  that  the  interests  of  the  country  may  be  better  served,  such 
extensions  shall  be  built  by  the  Imperial  Chinese  Government  with 
funds  at  its  disposal  from  Chinese  sources,  but  if  foreign  capital  is 
required,  and  the  terms  offered  by  the  Banks  are  as  favorable  as 
those  offered  by  others  preference  will  be  given  to  the  Banks. 

The  four  banking  groups  were  to  take  the  loan  in  equal 
shares  and  without  responsibility  for  each  other. 

The  Hupei-Hunan  section  of  the  roads  covered  by  the 
Hukuang  loan  agreement  has  been  built  from  Wuchang 
to  Changsha,  a  distance  of  286  miles,  where  it  connects 
with  the  Pingsiang  colliery  line,  taking  the  rails  as  far 
along  as  Chuchow  on  the  way  to  connect  with  the  Kwang- 
tung  Eailway.  This  section  is  now  being  operated  wholly 
by  the  Chinese.  Its  financial  results  have  not  been  satis- 
factory, but  this  has  been  largely  due  to  the  fact  that  it 
has  no  good  southern  terminal  point. 

Only  foundation  and  masonry  work  has  been  done  on 
the  Hankow-Ichang  section,  which  has  been  pushed  from 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      557 

Hankow  about  120  kilometers  (75  M.).  This  is  the  so- 
called  German  section. 

The  Ichang-Kweichow  section  suspended  operation 
after  completing  surveys  of  the  original  line  and  exten- 
sions to  Chengtu,  maintaining  only  an  engineer-in-chief 
and  a  nominal  staff  for  protecting  the  property.  This  is 
the  so-called  American  section. 

The  so-called  German  section  of  this  railway  has  been 
taken  over  by  the  Chinese  Government  and  is  under  the 
supervision  at  the  present  time  (April,  1919)  of  the 
American  Engineer-in-Chief. 

The  short  branch  of  sixty-five  miles  from  Chuchow  to 
Pinghsiang  was  opened  to  traffic  in  1902. 

The  Hukuang  Loan  and  the  Chinese  Revolution  of  1911. 

The  following  observations  of  Mr.  Willard  Straight,  the 
representative  of  the  American  group  of  banks,  party 
to  the  Hukuang  loan,  are  of  interest  in  connection  with 
the  statement  that  has  often  been  made  that  the  objection 
upon  the  part  of  the  Chinese  people  to  the  ' '  nationaliza- 
tion," that  is  the  assumption  by  the  Central  Government 
of  control  of  the  lines  covered  by  the  loan,  constituted  an 
important  element  in  the  dissatisfaction  with  the  Peking 
Government  which  led  to  the  revolutionary  outbreak  in 
the  latter  part  of  the  year  1911.    Mr.  Straight  says : 

*'  There  was  an  ever-increasing  agitation  in  the 
Provinces  through  which  the  Hukuang  lines  were  to  be 
constructed.  Provincial  railway  companies  were  formed 
and  secured  from  the  vacillating  Peking  Government 
rights  which  violated  the  terms  of  the  agreement 
initialed  with  the  Tripartite  Banks,  and  in  which  the 
Chinese  had  agreed  the  American  group  should  be  given 
a  participation." 


558      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

In  a  note  Straight  adds:  ''  Considerable  sums,  quite 
insufficient,  however,  to  build  the  railways  in  question, 
were  secured  by  popular  subscription,  and  in  Szechuan 
Province  by  taxation  also.  Construction  was  commenced, 
and  abandoned,  and  in  a  number  of  well-authenticated 
cases  the  funds  obtained  by  the  companies  were  either 
lost  by  the  directors  thereof,  who  speculated  heavily  in 
the  Shanghai  *  Eubber  Boom,'  or  stolen  by  more  simple 
and  direct  methods.  The  demonstrated  inability  of  the 
provincial  companies  to  do  the  work  they  had  undertaken 
was  used  by  the  Imperial  Government  to  justify  its  very 
sound  policy  of  railway  '  nationalization'." 

In  another  place  Mr.  Straight  says : 

It  has  been  generally  stated  that  the  disturbances  in  Szechuan 
Province  in  August  and  September  last  [1911]  marked  the  begin- 
ning of  the  revolutionary  movement.  This  is  not  the  case  except 
that  the  general  unrest  created  thereby  contributed  to  the  rapid 
spread  of  the  anti-Manchu  sentiment.  The  Szechuan  agitation  was 
directed  against  the  "  nationalization  "  of  railways,  and  the  banking 
groups  therefore  have  been  accused  of  being  the  indirect  cause  of 
the  revolt.  This  again  is  not  true.  The  agitation  was  not  against 
railway  "  nationalization "  which  the  most  intelhgent  leaders  of 
Chinese  public  opinion  recognized  as  desirable,  but  against  the 
manner  in  which  it  was  carried  into  effect.  Sheng  Kung  Pao,  the 
Minister  of  Communications,  upon  the  signature  of  the  Hukuang 
Loan  Agreement  took  steps  to  repurchase  the  rights  of  the  pro- 
vincial companies  in  accordance  with  the  "  nationalization  "  plan. 
Incidentally,  it  is  reported  on  the  best  authority,  he  bought  up  the 
major  portion  of  some  of  the  provincial  bonds,  and  offered  to 
redeem  them  at  par.  He  did  not  acquire  control  of  the  Szechuan 
bonds,  and  therefore  offered  only  60  on  their  face  value.  Hence  the 
riots.'' 

"Article  "China's  Loan  Negotiations,"  contributed  to  The  Jowmal  of 
Race  Development,  April,  1913  (vol.  in,  pp.  369-411).  The  quotations  are 
from  footnotes  on  pages  384  and  386. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      559 

Tao-Ching  or  Pekin  Syndicate  Railway.  In  1898  the 
Pekin  Syndicate,  a  British-Italian  syndicate,  but  now 
ahnost  wholly  British  controlled,  obtained  the  right  to 
work  coal  and  iron  mines  in  several  places  in  Shansi  and 
in  Honan  which  carried  also  the  privilege  of  building 
railways  connecting  the  mines  with  water  navigation  or 
a  main  railway  line.^*  In  1905,  under  this  privilege,  the 
syndicate  built  a  line  from  Taokow  to  Poshan,  a  distance 
of  some  90  miles.  By  an  agreement  of  July  3,  1905,  the 
Chinese  Government  purchased  the  road,  giving  thirty- 
year  bonds  in  payment,  but  permitted  the  syndicate  to 
remain  in  control  of  the  road  until  the  bonds  should  be 


The  following  comments  of  Mr.  Straight  with  reference  to  the  circum- 
stances leading  up  to  the  loan  are  also  of  interest.  He  says :  "  There  are 
different  versions  as  to  the  exact  course  of  events  in  China  at  this  time. 
It  is,  however,  sufiBcient  to  state  that  in  conducting  pourparlers  with  the 
Chinese  authorities  for  a  loan  to  construct  the  Canton-Hankow  Railway 
( the  British  had  a  '  preference '  for  financing  the  building  of  this  line ) , 
the  representative  of  the  British  and  Chinese  Corporation  at  Peking 
refused  to  agree  to  *  Tientsin-Pukow '  terms  and  insisted  on  more  effective 
*  control.'  The  representative  of  the  German  group,  however,  accepted  these 
conditions  and  secured  the  contract.  The  diplomatic  protests  and  recrimi- 
nations among  the  bankers  which  followed  resulted  in  a  compromise  under 
which  the  British  and  Chinese  Corporation  was  subordinated  to  the  Hong- 
kong and  Shanghai  Bank,  which  with  its  French  associates,  combined  with 
the  German  group,  to  negotiate  a  loan  to  cover  not  only  the  Hankow- 
Canton  but  the  Hankow-Szechuan  Railways.  The  Agreement  was  initialled 
on  the  6th  of  Jime,  1909,  and  the  *  control '  provisions  accepted  by  the 
banks  were  similar  to  those  embodied  in  the  Tientsin-Pukow  Agreement. 

"The  inclusion  of  the  loan  for  the  construction  of  the  Hankow-Szechuan 
Railway  in  this  operation  entitled  the  American  interests  to  the  participa- 
tion which  the  American  group  eventually  secured. 

"  Rivalry  between  the  British  and  German  groups  had  enabled  the 
CKinese  in  the  original  Hukuang  agreement  to  secure  Tientsin-Pukow 
terms  despite  the  fact  that  the  operation  thereof  had  demonstrated  that 
more  stringent  control  provisions  were  needed." 

**  For  the  regulations  establishing  the  syndicate's  rights  in  Honan,  see 
MacMurray,  No.  1898/12. 


r.60      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

paid,  and  to  receive  twenty  per  cent,  of  the  net  profits. 
The  bonds  were  to  be  redeemable  after  1916. 

Projected  Railways  Since  1912.  With  the  exception  of 
the  Changsha-Yochow  and  Yochow- Wuchang  sections  of 
the  Canton-Hankow  Railway,  few  lines  of  railway,  except 
branch  lines,  have  been  opened  to  traffic  in  China  since 
1912.  This  has  been  dne  in  part  to  the  demoralization  of 
China  consequent  upon  the  Revolution,  and  in  part  to 
the  preoccupation  of  the  Treaty  Powers,  since  1914,  in 
the  Great  War. 

A  considerable  number  of  railway  concessions  have, 
however,  been  granted  by  the  Republican  Government, 
and  among  them  one  to  French-Belgian  interests  for  a 
north  and  south  trunk  line  from  Tatungfu  to  Chengtu. 
Also  the  French  have  obtained  the  right  to  build  a  line 
from  Yunnanfu  to  the  Bay  of  Yamchow.  A  line  has  also 
been  projected  to  extend  the  Kaifeng-Honan  line  east- 
ward to  the  coast  and  westward  into  Kansu.  A  consider- 
able section  of  this  line  has  been  built,  connecting  at 
Hsuchow  with  the  Tientsin-Pukow  Railway. 

Shasi-Shingyi  (Sha-Shing)  Railway.  After  the  failure 
in  1911  of  the  then  pending  international  loan  negotia- 
tions, the  British  Government  gave  its  approval  to  a 
forty-year  loan  of  £10,000,000  negotiated  by  the  British 
contracting  firm  of  Pauling  &  Company,  Ltd.,  * '  for  the 
construction  and  equipment  of  the  railways  from  a  point 
on  the  Yangtze  opposite  Shasi  to  Shingyi,  in  the  Province 
of  Kweichow,  together  with  a  branch  line  from  Changteh 
to  Changsha. ' '  ^^ 

*  For  the  loan  contraxit  and  operating  contract  for  this  railway,  see 
MacMurray,  No.  1905/5. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL       561 

The  loan  agrement,  signed  July  25,  1914,^®  provided 
that  Pauling  &  Company  should  issue  on  behalf  of  the 
Government  of  China  a  loan  for  £10,000,000,  which  should 
be  in  the  form  of  Chinese  Government  bonds,  the  proceeds 
to  be  devoted  to  the  construction  of  the  lines  of  road  that 
have  been  mentioned.  The  payment  of  the  interest  and 
the  redemption  of  the  bonds  were  of  course  to  be  guaran- 
teed by  the  Chinese  Government,  and,  in  addition,  the 
bonds  were  to  constitute  a  first  mortgage  in  favor  of  the 
contracting  company  upon  the  railway  as  and  when  con- 
structed and  on  the  revenues  from  it  of  all  kinds  and 
upon  all  materials,  rolling  stock,  buildings,  etc.,  pur- 
chased for  the  railway.  There  was  to  be  established  a 
head  office  under  the  direction  of  a  Chinese  Managing 
Director,  and  associated  with  him  a  Chief  Accountant 
who  should  be  an  Englishman,  and,  after  completion  of 
construction,  a  British  Engineer-in-Chief.  For  all  tech- 
nical appointments  for  the  operation  of  the  railway, 
Europeans  of  experience  and  ability  were  to  be  engaged, 
but  if  competent  Chinese  should  be  available  for  these 
positions  they  were  to  be  preferred.  The  accounts  of 
receipts  and  disbursements  of  the  railway's  construction 
and  operation  were  to  be  in  the  department  of  the  Chief 
Accountant,  who  was  to  organize  and  supervise  them  and 
report  upon  them.  He  was  to  certify  all  receipts  and 
payments,  which  latter  were  to  be  authorized  by  the 
Managing  Director.  A  school  for  the  education  of 
Chinese  in  railway  matters  was  to  be  established  by  the 
Managing  Director  subject  to  the  approval  of  the  Chinese 
Government. 

••  For  text  of  final  agreement,  see  MacMurray,  No.  1914/7. 
36 


562      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Subject  to  the  approval  of  Pauling  &  Company,  a 
British  firm  of  consulting  engineers  was  to  be  appointed 
by  the  Government,  whose  representative  in  China  should 
be  an  Englishman  and  be  entitled  Engineer-in-Chief, 
who,  during  construction,  should  supervise  the  work  in 
the  interest  of  the  Government  and  of  the  bondholders. 
The  contracting  company  was  to  act  as  agents,  during 
construction,  for  the  purchase  of  all  materials  from 
abroad.  For  its  services  the  company  was  to  receive 
an  amount  equal  to  the  sum  actually  expended  together 
with  a  further  sum  of  five  per  cent,  on  the  original  net 
cost  of  all  materials,  plant  and  goods  required  to  be 
imported  from  abroad.  With  a  view  to  encouraging 
Chinese  industries,  rails  manufactured  at  the  Hanyang 
Steel  and  Iron  Works,  native  cement,  and  other  goods 
manufactured  and  produced  in  China  were  to  be  pre- 
ferred at  equal  price  and  quality.  At  equal  rates  and 
qualities,  goods  of  British  manufacture  were  to  be  given 
preference  over  goods  of  other  foreign  origin. 

Siems-Carey  Concessions.  By  a  contract  signed  May  17, 
1916,  the  Siems-Carey  Co.,  an  American  concern,  ob- 
tained the  right  to  *  *  locate,  build  and  work  ' '  steam  rail- 
roads in  China  to  an  aggregate  of  1,500  miles.'"^  The 
following  five  roads,  making  up  this  aggregate,  were 
enumerated = 

Hengchowfu,  in  Hunan,  to  Nanning  in  Kwangsi. 

Fengcheng,  in  Shansi,  to  Ninghsia  in  Kansu. 

Ninghsia,  in  Kansu,  to  Lanchowfu  in  Kansu. 

••  By  the  Supplementary  Agreement  of  September  29,  1916,  this  was 
changed  to  1,100  miles.  For  texts  of  original  agreement  and  supplements, 
see  MacMurray,  No.  1916/7. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      563 

Chungcliow,  in  Kwangtung,  to  Lu  Hwei  in  Kwangtung. 
Hangchow,  in  CheMang,  to  Wenchow  in  Chekiang. 

It  was  provided,  however,  that  should,  for  any  reason, 
it  become  undesirable  to  build  any  of  these  lines,  the 
Government  of  China  would  grant  concessions  between 
other  points  to  an  equal  amount  of  mileage.  In  conformity 
with  this  undertaking,  the  American  company,  in  lieu  of 
certain  of  the  above  lines,  has  been  given  the  concession 
to  construct  the  Ohu-Chin  Railway  from  Chuchou,  in 
Hunan  near  Changsha,  to  Chinchou  in  Kwangtung. 
This  road,  when  constructed,  will  be  approximately  700 
miles  in  length.  As  part  of  the  additional  400  miles  which 
the  company  was  to  have  the  right  to  build,  the  Chinese 
Ministry  of  Communications,  on  February  7,  1917,  sug- 
gested that  a  line  be  built  from  Chouchia-kou,  in  Honan, 
through  Nanyang,  to  Hsiangyang,  in  Hupeh,  a  distance 
of  200  miles,  and  to  be  called  the  Chou-Hsiang  Railway. 

The  agreement  of  May  17,  1916,  with  the  American 
company,  it  is  to  be  observed,  was  simply  one  for  the 
construction  of  the  proposed  roads,  the  company  to  have 
no  interest  in  them  other  than  its  compensation  for  its 
services  as  railway  contractors.  The  financing  of  the 
projects  was  to  be  by  bonds  to  be  issued  by  the  Chinese 
Government,  the  selling  of  which  was  to  be  undertaken 
by  the  company.^  ^ 

The  executive  head  of  the  roads  was  to  be  a  Chinese 
Director-General,  appointed  by  the  Government,  assisted 
by  a  Chief  Engineer,  a  Traffic  Manager,  and  an  Auditor 
chosen  and  vouched  for  by  the  American  company,  and 
appointed  by  the  Director-General.    All  plans  and  esti- 

*  This  waa  to  be  done  through  the  American  International  Corporation. 


564      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

mates  of  construction  were  to  be  submitted  in  advance 
to  the  Minister  of  Communications  for  his  information 
and  approval,  and  the  Government  was  to  have  the  right 
to  employ  inspectors  to  inspect  all  work  as  it  progressed. 
The  company  was  to  have  a  five  per  cent,  commission  on 
all  purchases  made  in  behalf  of  the  roads  (excepting 
purchases  of  lands),  and  eight  per  cent,  of  all  other 
moneys  expended  for  construction.  Further,  for  handling 
and  selling  the  bonds  by  which  the  roads  were  to  be 
financed,  the  company  was  to  receive  twenty-five  per  cent. 
of  the  net  profits  derived  from  operating  the  roads  after 
paying  all  operating  and  bond  charges,  until  all  the  bonds 
should  be  paid.^® 

None  of  these  roads  have  been  built,  although  a  con- 
siderable number  of  routes  have  been  surveyed. 

The  projected  line  from  Chuchow  to  Yamchow  was 
objected  to  by  the  French  as  in  violation  of  a  prior  con- 
cession in  the  form  of  a  note  from  a  former  Vice-Minister 
of  one  of  the  departments  of  the  Chinese  Government. 
A  line  from  a  point  on  the  Peking- Suiyuan  road,  running 
northwestward,  was  protested  by  the  Russian  Legation 
as  in  violation  of  a  prior  promise  which  China  had 
made  not  to  build  in  that  region  without  first  obtaining 
Russians  consent.  The  lines  in  Hunan  and  Hupeh  were 
objected  to  by  the  British,  who  claimed  that  they  had 
preferential  rights  there  under  a  letter  from  Viceroy 
Chang  Chih-tung.  None  of  these  objections  have  been 
conceded  by  either  the  American  or  Chinese  Govern- 
ments to  be  effective  in  excluding  American  enterprises 
in  the  designated  localities. 

••For  constructing  the  section  of  the  Chuchow-Chinchow  line  from 
Chuchow  to  Paoking  in  Hunan,  and  completing  a  survey  of  a  route  from 


EAILWAY  LOANS  AND  FOREIGN  CONTEOL      565 

The  appearance  in  the  Siems-Carey  contracts  of  the 
twenty  per  cent,  participation  in  the  profits  of  the  lines 
to  be  built  has  been  somewhat  commented  on,  because, 
in  the  first  place,  it  would  seem  to  be  a  return  to  the 
earlier  practice  of  recognizing  what  amounted  to  a  part 
ownership  of  foreigners  in  the  roads — a  concession  which 
for  years  the  Chinese  had  sought  to  avoid ;  *^  and,  in  the 
second  place,  because  China's  engagements  (some  of  them 
secret)  with  foreign  syndicates  to  grant  to  them,  in  the 
future,  as  favorable  terms  as  might  be  given  to  any  other 
party,  might  make  it  necessary  to  grant  Ihe  profit- 
participating  privilege  to  those  **  most  favored  "  foreign 
interests.^^ 

the  Peking-fHankow  Railway  through  Hsiangyang  (Hupeh)  to  Chengtu 
in  Szechuan,  an  issue  of  $6,000,000  of  five-year  Treasury  Bills  was  arranged 
for.  By  a  supplementary  agreement  of  September  29,  1916,  the  25  per  cent, 
of  net  profits  was  reduced  to  20  per  cent.  At  the  time  of  the  present 
writing  only  the  amounts  necessary  for  defraying  the  costs  of  surveys  have 
been  advanced  by  the  bankers. 

*•  The  Chinese  paid  $1,000,000  to  exclude  the  profit  participation  clause 
from  the  original  Tientsin-Pukow  agreement,  and  one  of  the  purposes  in 
converting  the  original  Peking-Hankow  loan  had  been  the  same. 

**  This  point  is  especially  stressed  in  a  pamphlet  entitled  "  The  Break- 
down of  American  Diplomacy  in  the  Far  East,"  printed  (but  not  published) 
by  George  Bronson  Rea.  He  says  (p.  84)  :  "  The  serious  feature  of  reviving 
the  profit-sharing  clause  in  state-owned  railways  lies  in  the  fact  that  due 
to  China's  secret  understandings,  the  American  contract  compels  the 
revision  of  all  China's  outstanding  and  imexecuted  railway  agreements. 
...  To  understand  this  situation  better,  it  must  be  explained  that  China 
has  entered  into  railway  contracts  with  foreign  syndicates  for  the  financing 
and  construction  of  approximately  ten  thousand  miles  of  new  line  (exclu- 
sive of  the  American  contract  for  eleven  hundred  miles)  the  loans  for 
which  have  yet  to  be  floated.  Under  present  conditions  the  total  amount 
of  loans  required  for  the  construction  of  these  eleven  thousand  one  hundred 
miles  will  approximate  $80,000  per  mile,  or  an  aggregate  of  $900,000,000. 
(Projected  lines  in  Yunnan  and  Szechuan  will  cost  over  $150,000  per  mile). 
If  spread  over  a  period  of  fifteen  years,  at  least  $60,000,000  will  be  required 
annually  to  finance  the  lines  already  contracted  for.    As  matters  stand. 


o66      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

Shantung  Canal  Improvement  Loan.  By  an  agreement 
of  April  19,  1916,*2  with  the  American  International 
Corporation,  the  Chinese  Government,  in  behalf  of  the 
Government  of  the  Province  of  Shantung,  contracted 
a  loan  not  to  exceed  $3,000,000,  to  run  thirty  years,  and 
to  bear  7%  interest,  the  proceeds  to  be  employed  for 
improving  the  South  Grand  Canal  in  Shantung  Province 
and  reclaiming  certain  land  areas.  As  security  were 
pledged  the  lands  to  be  reclaimed  owned  by  the  Govern- 
ment of  Shantung  Province,  revenues  to  be  derived  by 
the  Government  from  the  lands  affected  by  the  proposed 
work,  and  all  machinery  and  tools  purchased  by  the  loan 
funds.  If  these  revenues  should  prove  insufficient,  the 
Government  undertook  to  make  good  the  deficiency  with 
other  revenues  provided  in  the  budget  of  Shantung 
Province. 

Detailed  provisions  were  contained  in  the  agreement 
as  to  the  direction  under  which  the  public  works  provided 
for  were  to  be  carried  out  and  disbursements  made.  The 
engineering  work  was  to  be  done  by  a  contracting  firm 
which  was  to  receive  as  compensation  10%  of  the  total 
cost  of  the  work. 

By  an' agreement  of  May  13, 1916,  between  the  Govern- 
ment of  China  and  the  American  International  Corpora- 
tion, a  loan  to  the  former  of  $3,000,000  was  arranged  for 

the  British,  French,  Belgian  and  Russian  concession  holders  cannot  comply 
with  their  obligations  under  the  old  terms.  It  is  now  impossible  to  issue 
loans  under  the  pre-war  *  cheap  money '  conditions.  As  there  is  no  time 
limit  attached  to  these  contracts  or  any  penalty  for  failure  to  carry  them 
out  within  a  specified  time,  they  will  pass  into  cold  storage  unless  better 
terms  are  conceded."  As  to  this  agreement,  it  may  be  observed  that  such 
better  terms  would,  in  any  event,  and  aside  from  the  criticized  provision 
of  the  American  contract,  have  been  necessary. 

•For  the  text  of  this  agreement,  see  MacMurray,  No.  1916/5. 


RAILWAY  LOANS  AND  FOREIGN  CONTROL      567 

to  be  called  the  **  Huai  River  Conservancy  Grand  Canal 
Improvement  Seven  Per  Cent.  Gold  Loan  of  1916,'*  for 
carrying  on  the  Hnai  River  conservancy  works.*^  As 
security  for  the  loan  were  pledged  all  tolls  and  taxes 
exclusive  of  Likin,  then  or  thereafter  to  be  levied  on  the 
Grand  Canal  in  Kiangsu  Province.  The  work  was  to  be 
carried  on  by  a  contracting  company  upon  a  percentage 
basis  under  the  direction  of  a  Chinese  Director-General, 
with  whom  were  to  be  associated  an  American  Chief 
Engineer  and  American  Chief  Accountant. 

Under  date  of  November  20, 1917,  the  American  Inter- 
national Corporation  concluded  a  further  agreement^* 
with  the  Chinese  Government  under  which  it  was  to  loan 
$6,000,000  for  the  improvement  of  the  Grand  Canal  in  the 
Provinces  of  Chihli  and  Shantung.  The  terms  of  this 
loan  were  similar  to  those  under  the  agreement  of  April 
19,  1916,  which  it  replaced,  and,  as  said,  applied  to  the 
Grand  Canal  in  Chihli  as  well  as  in  Shantung.  It  was 
understood  that  Japanese  interests  were  to  participate 
in  the  floatation  of  the  loan  to  the  extent  of  $2,500,000. 

With  reference  to  the  Grand  Canal  loan  and  the  other 
Siems-Carey  railway  projects,  it  may  be  noted  that  a 
total  of  approximately  $1,500,000  has  been  expended. 
This  sum  represents  moneys  advanced  by  the  company 
on  surveys  and  preliminary  investigations.    There  have 


**  Printed  in  MacMurray,  No.  1916/6.  By  an  agreement  of  January  30. 
1914,  the  American  Red  Cross  had  succeeded  in  obtaining  an  option  from 
the  Republic  of  China  to  advance  the  stun  of  $20,000,000  for  improve- 
ment of  the  water  courses  embraced  in  Huai  River  district.  These  rights 
of  the  American  Red  Cross  were  taken  up  by  the  American  International 
Corporation  under  its  agreements  with  the  Chinese  Government  of  April 
19,  1916,  and  May  13,  1916. 

**  Printed  in  MacMurray  in  note  to  No.  1916/5. 


5€8      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

been  no  public  subscriptions  involved  in  either  of  these 
projects. 

Railways  Owned  and  Operated  by  Foreign  Governments 
or  Interests.  The  railways  in  China  coming  under  this 
head  include  the  Chinese  Eastern  Eailway,  the  South 
Manchuria  Railway  system,  the  Shantung  Railway  from 
Tsingtau  to  Tsinanfu  with  its  short  branches,  and  the 
French  Yunnan  Railway.  The  circumstances  under  which 
these  lines  were  built,  and  the  almost  complete  extent  to 
which  they  are  operated  by  foreign  governments,  or  cor- 
porations acting  as  the  agents  of  such  governments,  have 
been  so  fully  set  forth  in  earlier  chapters  of  this  volume 
that  a  further  discussion  of  them  in  this  chapter  wiU  not 
be  needed. 

Summary.  Grouping  the  railways  of  China  according 
to  the  auspices  under  which  they  are  operated  or  con- 
trolled, the  following  table  is  obtained  :*^ 

DATE  OF       LENGTH  OF        FOREIGN  NAnON 
NAME  OP  LINE  AGREEMENT        LINE  INTOLVED 

I.  Lines  ovoned  and  operated  by  foreign  authority. 

1.  South  Manchuria  Railway..   1896  1150  Kms.  Japan  (since  1905) 

2.  Chinese  Eastern 1896  1722  Kjns.  Russia 

3.  Yunnan  Railway 1896  465  Elms.  France 

4.  Shantung  Railway 1898  493  Kms.  Grermany   (Japan) 

II.  Lines  ovoned  by  the  Chinese  Government,  but  with  a  large  measure  of 

administrative  control  reserved  by  the  mortgage  holders. 

1.  Peking-Hankow 1897     1313  Kms.     Belgiiun 

(Redeemed  and  placed  imder  completed  CJhinese  control  in  1908) 

2.  Peking-Mukden 1898      975  Kms.    Great  Britain 

3.  Chengting-Taiyuan 1902      243  Kms.    Russia-France 


'This  is  based  upon  the  table  given  by  Mr.  J.  K  Baker,  American 
Adviser  to  the  Chinese  Ministry  of  Commimications,  in  his  excellent  article 
in  Millard's  Review  of  November  1,  1919,  entitled  "  China's  Railway  Condi- 
tion in  a  Nutshell." 


EAILWAY  LOANS  AND  FOEEIGN  CONTROL      569 


DATE  OF       LENGTH  OF        FOEEIGN  NATION 
NAME  OF  LINE  AGEEEMENT        LINE  INVOLVED 

4.  Shanghai-Nanking 1903       327  Kms.  Great  Britain 

5.  Kaifeng-Honan 1903       185  Kms.  Belgium 

6.  Taokow-Chinghua 1905       150  Kms.  Great  Britain 

(Transferred  from  private  ownership  in  1905) 

7.  Canton-Kowloon 1907       143  Kms.  Great  Britain 

(35  kilometers  additional,  on  leased  territory,  is  British  owned,  and 
operated  as  a  through  line  with  the  Chinese  section) 

8.  Kirin-Changchun 1907       130  Kms.     Japan 

(Note:   All  of  the  above  lines,  except  the  Kaifeng-Honan  and  the 
Kirin-Changchun,  were  agreed  upon  provisionally  in  1898-99) 

III.  Lines  under  complete  Chinese  control,  but  subject  to  the  stipulation 

that  foreign  engineers  and  chief  accountants  shall  be  employed. 

1.  Tientsin-Pukow 1908     1106  Kms.     Great  Britain 

2.  Shanghai-Hangchow-Ningpo.   1908       286  Kms.     Great  Britain 

3.  Peking-Hankow 1908     1313  Kms.     Belgium 

4.  Canton-Hankow  and  900  Kms.     Four  Nation 

Hankow-Szechuan 1911  500  Kms.         Group 

5.  Lung-Hai 1912  1600  Kms.  Belgiiun 

6.  Tung-Chengtu 1913  1600  Kms.  France-Belgium 

7.  Pukow-Sinyang 1913  560  Kms.  Great  Britain 

(Preliminary  agreement  signed  in  1899) 

8.  Nanking-Hunan 1914  1100  Eons.  Great  Britain 

9.  Yamchow-Yimnan 1914  1900  Kms.  France 

10.  Shaei-Shingyi 1914     1100  Kms.     Great  Britain 

11.  Routes  to  be  determined 1916     1500  Kms.     America 

IV.  Lines  constructed  loithout  use  of  foreign  loans. 

1.  Chuchow-Pinghsiang 1898         90  Bans. 

2.  Canton-Samshui 1904        49  Kms. 

(Purchased  outright  from  American  China  Development  Co.  in  1906) 

3.  Peking-Suiyuan 1906       495  Kms. 

4.  Changchow-Amoy 1911        28  Kms. 

In  addition  to  the  above  there  are  some  680  kilometers 
of  line  built  by  private  and  provincial  capital,  most  of 
which  are  not  affected  with  any  foreign  interest. 


FOREIGN  LOANS  TO  CHINA  CLASSIFIED  ACCORDING 
TO  THEIR  SECURITY 


A  complete  and  accurate  statement  of  all  of  China's  loans — their 
amounts,  terms,  securities  pledged,  etc. — is  a  practical  impossibility. 
It  is  doubtful  whether,  for  reasons  stated  in  Chapter  I,  such  a  list 
could  be  compiled  by  the  Chinese  Government  itself.  The  lists 
which  follow,  are,  therefore,  to  be  accepted  only  as  tentative.  They 
have,  however,  been  compiled  with  considerable  care,  and,  it  is 
hoped,  will  be  found  more  nearly  complete  and  accurate,  than  lists 
elsewhere  to  be  found. 

CUSTOMS  REVENUE 

AUOmrT  PBICB  TO 

DATS  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATCRITT 

1895  Imperial     Government 

loan  of  1895  (Franco- 
Russian)    £7,910,000.00       4%       94^       1931 

1896  Imperial     Government 

loan  of  1896  (Anglo- 
German)     £10,000,000.00       6%         94         1932 

1898  Imperial  Government 
loan  of  1898  (2nd  An- 
glo-German)             £12,000,000.00     41^%       83         1943 

1902    Boxer   Indemnity £61,665,182.00      4%  1940 

1913  Reorganization       Gold 

Loan    (5  Powers) £25,000,000.00       6%         84         1960 

1914  Italo-Belgian     Loan     or 

conversion     5%     loan 


(Banque  de  PateLaon 

1918  or 

Belcrium )    

£100,000.00      5% 
LIKIN 

1955 

■"-^^*o   ***** /      • 

The 

Likin  revenue  is  sometimes  listed 

along  with  other  provincial 

taxes.     In  connection 

with  some  loans  the  likin  of  certain  specified  provinces  is  mentioned. 

AlfOUlTT 

PUOI  TO 

•ATI 

NAME  OF  LOAN 

OUTSTANDING              RATE 

CHINA        UATUKITT 

1898 

Imperial     Government 
loan  of  1898  (2nd  An- 

glo-German   loan ) . . . . 

£12,000,000.00     4iA% 

83        1943 

1908 

Loan     for     Tientsin-Pu- 
kow   Railway    (Hong- 

570 


FOREIGN   LOANS   TO    CHINA  571 

Auoxm  nacm  to 

ai&va  KAMI  or  loan  ovrsTAKDnro         rati      chota     iiatoutt 

kong-Sh'ai    Bank    and 

Deutsch-  Asiatische 

Bank)     £3,000,000.00      5%         93         1938 

1909  Loan     for     Tientsin-Pu- 

kow  Railway  ( Hong- 
kong and  Sh'ai  Bank 
and  Deutsch- Asiatische 
Bank)     £2,000,000.00      5%         93         1938 

1910  Loan     for     Tientsin-Pu- 

kow  Railway  (Hong- 
kong and  Sh'ai  Bank 
and  Deutsch-Asiatische 
Bank    £3,000,000.00       5%  1940 

1911  Hukuang    Railway    loan 

(4  Powers)     £6,000,000.00      5%         95         1936 


SALT  REVENUE 

NoTi.     In  the  case  of  the  earlier  loans  salt  revenue  for  specified  provinces  was  named 
as  security. 

AlfOUKT  PUCI  TO 

DATB  NAMK  OF  LOAN  OCTSTANDINO  RATE         CHINA        MATURITY 

1898    Imperial     Government 

Loan     of     1898     (2nd 

Anglo-German)     £12,000,000.00     i%%       83         1943 

1902     Boxer    Indemnity £61,565.182.00       4%  1940 

1910  Chihli  Provincial  Bonda 

of    1910 Tls  3,200,000.00 

1911  Hukuang  Railway  Loan  £6,000,000.00       5%         95         1936 

1912  Chinese  Government  5% 

Gold      Loan       ( Crisp 

Loan)     £5,000,000.00      5%         89         1952 

1913  Reorganization  Loan    (5 

Powers)    £25,000,000.00      6%         84         1960 

1911     Hupei    Provincial    Loan 

of    1911 Tls  2,000,000.00       7% 

1917     Kuangtung  Loan    (Bank 

of  Taiwan)    Yen  1,500,000.00 

1917  Central  Government  ( 1st 
advance  on  2nd  Reor- 
ganization Loan )  Yoko- 
hama Specie  Bank)  . .     Yen  5,000,000.00      7%        93         1918 


572      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

AMOUNT  FRICa  TO 

DATV  NAME  OF  LOAN  OTTTSTANDINO  EATI          CHINA        MATURITT 

1918  Yokohama  Specie  Bank 
share  of  Group  Bank 
advance  for  Flood  Re- 
lief            Yen  200,000.00 

1918  2nd  Advajice  on  2nd  Re- 
organization Loan  ( Yo- 
kohama Specie  Bank)   Yen  10,000,000.00       7%         99         1919 

1918  Central  Government  (Yo- 
kohama Specie  Bank)     Yen  1,000,000.00      7%       par       1918 

1918  3rd  Advance  on  2nd  Re- 
organization Loan 
(Yokohama  Specie 
Bank)     Yen  10,000,000.00      7%  1919 

RAILWAY:    PROPERTY  AND  REVENUES 

AMOTTNT  FSIOI  TO 

DATS  NAME  OF  LOAN  OXTTSTANSINO  KATI         CHINA        MATVBITT 

1898  Imperial  Railways  of 
North  China  (British 
Chinese  Corporation 
5%  Gold  Loan) £1,600,000.00      5%        97        1944 

1902  Loan       for       Cheng-Tai 

Railway    £791,000.00      6%         90         1938 

1903  'Loan  on  Kaifeng-Honan 

Railway    £593,250.00      5%  1934 

1904  British  and  Chinese  Cor- 

poration for  Shanghai- 
Nanking  Railway 
(Hongkong  and  Shang- 
hai Bank) £2,250,000.00      5%        90        1963 

1904  Loan  for  Shanghai-Nan- 

king Railway  (Hong- 
kong and  Sh'ai  Bank)  £650,000.00      5%        95        1962 

1905  Loan  for  Taokow-Ching- 

hua  (Tao-Ching)  Rail- 
way (Peking  Syndi- 
cate)       £700,000.00      5%        90        1985 

1905    "Ditto" £100,000.00      5%        90        1936 

1907  Loan  for  Canton-Kow- 
loon  Railway  (British 
And  Chinese  Corpora- 
tion)       £1^00,000.00      5%        94        1937 


FOEEIGN   LOANS   TO    CHINA  57:3 

AHOVHT  PRiCE  TO 

BAT!  NAUB  Or  LOAN  OUTSTANDING  RATE         CHINA        MATUBITT 

1907  'Loan    for    Kaifeng-Ho- 

nan    Bailway    (see    a 

above)     £632,800.00      5%        90        1934 

1908  Loan     for     Tientsin-Pu- 

kow  Ry.  { Imperial  Chi- 
nese Grovt,  5%  Tien- 
tsin-Pukow  Ry.  Loan) 
(Hongkong  and  Sh'ai 
and  Deutsch-Asiatische 

Banks)     £3,000,000.00      5%        93        1938 

1908  Tientsin-Pukow  Railway 
5%  Hongkong  and 
Sh'ai  and  Deutsch- 
Asiatische  Banks)    . .  £3,000,000.00      5% 

1908  3  h  a  n  g  h  a  i-Hangchow- 

Ningpo  Railway  Loan 
(British  and  Chinese 
Corporation)     £1,500,000.00      5%        93         1938 

1909  Hsinmintun-Mukden  Rail- 

way (Yokohama  Spe- 
cie Bank) Yen  186,750.00      5%        93        1927 

1909  Imperial     Railway    Ad- 

ministration, Kirin- 
Changchun  Railway 
(Yokohama    Specie 

Bank)     Yen  2,150,000.00      5%        93        1934 

1912  Shanghai-Fengching  Ry. 
Loan  to  Nanking  Pro- 
visional Government 
(Okura  and  Company)      Yen  3,000,000.00       8%  1922 

1910  Imperial     Railway     Ad- 

ministration ( Redemp-. 
tion  of  Peking-Hankow 
Railway)  *    Yen  2,200,000.00       7%       97%       1920 

1912  Nanchang-Kiukiang  Rail- 

way   £500,000.00     61^%       95         1927 

1913  Lung-Hai    Railway £4,000,000.00      5%         85         1952 


*  See  footnote  to  Anglo-French  Loan  for  redemption  of  Peking-Hankow 
Railway  of  1908, 


574      FOEEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 


DAT!  NAME  OF  LOAN 

1913  Ministry  of  Communi- 
cations ( For  oonstruo- 
tion  of  Ssupingkai- 
Chengchiattm  Rail- 
way)     

1913  Pukow-Hsinyang      Rail- 

way (British  and  Chi- 
nese  Corporation ) . . . . 

1914  Honan    Railway    Loan.. 
1914    British  and  Chinese  Cor- 
poration  Loan 

1914  Ching-Yu  Ry.  Advances., 

1916  Tung-Cheng   Railway. . . 

1916  Pin-Hei  Railway 

1916  Siems-Carey      Railways 

Advances    

1917  Imperial     Railway     Ad- 

ministration, Central 
Government  ( South 
Manchuria   Railway)  . 

1918  Ssupingkai-Chengchiatun 

Railway    

1918  Nanchang  Railway  Loan 
(Toa  Kogyo  Kaisha) 

1918  Kirin-Hueining  Railway 
(3   Japanese   Banks). 

1918  Peking-'Suiyuan  Railway 
( Japanese   Banks ) . . . . 

i918  Four  Railways  in  Man- 
churia   and    Mongolia 

1918    Railways  in  Shantung.. 


AMOmrT  FRICB  TO 

OUTSTANDING  BATH         CHINA        UATUHITT 


Yen  5,000,000.00 


£3,000,000.00  5% 

£800,000.00  5%       87%       1935 

£375,000.00  6%         91         1931 

Fra  32,115,000.00  6%       89%       1919 

£10,000,000.00 
50,000,000  roubles 

U.S.  $1,000,000.00  7% 


Yen  6,500,000.00      5%       91%       1917 

Yen  2,600,000.00       7%  1919 

Yen  1 00,000.00  (?) 
or  $7,000,000.00  (Mex.) 

Yen  10,000,000.00       5%        par        1958 

Mex.$3,000,000.00 


Yen  20,000,000.00       8% 
Yen  20,000,000.00      8% 


1958 
1958 


CANAL  TOLLS 


AMOUNT 
OUTSTANDING 


DAT!  NAME  OF  LOAN 

1917  Grand  Canal  Loan 
( S  i  e  m  8  -  Carey  Ad- 
vances)         U.S.  $700,000.00      8% 


PRIM  TO 
RATI         CHINA        UATURTFT 


FOREIGN   LOANS    TO    CHINA  575 


SUNDRY  PROVINCIAL  TAXES 

Note.     Under  this  classification  Likin  is  also  included  in  the  case  of  some  loans. 

AMOUHT  PSICK  TO 

DATE  NAJIE  OF  LOAN  OUTSTANDING  RATE         CHINA        MATCBITT 

1908     Loan     for     Tientsin-Pu- 

kow    Railway £3,000,000.00       5%         93         1938 

1908  Tientsin-Pukow  5%  Rail- 
way Loan  (Anglo- 
German   Ist  Issue)...  £3,000,000.00      5%       98% 

1908  Anglo-French    Loan    for 

Redemption  of  Peking- 
Hankow    Railway'...  £5,000,000.00    4%%       98        1938 

1909  Loan     for     Tientsin-Pu- 

kow Railway  (2nd  Is- 
sue)       £2,000,000.00       5%         93         1938 

1910  Tientsin-Pukow  Railway 

Supplemental  Loan 
( Anglo-German )  ( 3d 
Issue)     £3,000,000.00       5%      100y2 

1911  Hukuang  Railway  Loan 

(4    Powers) £6,000,000.00       5%         95         1936 

1911  Imperial  Railway  Ad- 
ministration ( Yoko- 
hama Specie  Bank)  .  .   Yen  10,000,000.00       5%         95         1936 

1916     Fengtien  Province  (for 

relief  of  Chinese  banks 

in   Mukden Yen  2,000,000.00       Q%%  1920 

1918     Fukien    Province Yen  1,000,000.00 

1918  Hupei  Province  (Yoko- 
hama Specie  Bank)  . .     Yen  1,000,000.00 

1918     Shensi  Province    (Okura 

Group)    Yen  1,000,000.00 

1918     Hupei    Province Yen  1,000,000.00 


•It  is  understood  that  by  an  agreement  with  the  Bank  of  Communica- 
tions, August  1,  1910,  the  text  of  which  is  not  available,  Messrs.  Dunn, 
Fischer  and  Co.,  of  London,  purchased  bonds  of  this  redemption  loan  to  the 
nominal  value  of  £450,000;  on  August  15,  1910  the  Yokohama  Specie  Bank 
took  bonds  to  the  value  of  Yen  2,200,000 ;  and  the  City  Safe  Deposit  and 
Agency  Co.,  Ltd.  took  a  further  lot  as  security  for  a  loan  of  £150,000.  See 
1910  Imperial  Railway  Administration  loan,  1910  Chinese  Government 
Peking-Hankow  Loan,  and  1912  Chinese  Government  7%  Peking-Hankow 
Ry.  Redemption  Loan. 


576      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 


GOVERNMENT  GUARANTEE 

AUOUHT  rBIOB  TO 

Bin  HAUE  OF  LOAH  OtTTBTilllDIKO  RATH         CHIHA        UATURITT 

1904    British  and  Chinese  Oor- 
poration      Loan      for 
Shanghai-Nanking  Rail- 
way       £2^50,000.00       5%         90         1953 

1907    Loan   for   Canton   Kow- 

loon   Railway £1,500,000.00       5%         94         1937 

1909  Imperial  Railway  Ad- 
ministration (Yoko- 
hama Specie  Bank)  . .        Yen  186,750.00       5%         93         1927 

1909     "Ditto"     Yen  2,150,000.00       5%         93         1934 

1917  2nd  Loan  to  Bank  of 
GonununicatioBS  ( 3 
Japanese   Banks) Yen  20,000,000.00     7%%  1920 

1917    Canton  Provincial  Loan 

(Bank  of  Taiwan)  ...  Mex.$3,000,000.00      8%        96        1919 


PEKING  OCTROI 

>ATB  NAMB  OF  LOAN  OUTSTANDING  BATB          CHINA        MATOTUTT 

AMOUNT  PRICX  TO 

1912     First    Amhold    Karberg 

Loan   £60,000.00      6%        95        1916 

1912     Second  Amhold  Karberg 

Loan    £350,000.00       6%         95         1921 


TREASURY  NOTES  OF  THE  CHINESE  GOVERNMENT 

AUOUNT  FRIGE  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  RATE          CHINA        MATURITY 

1913     Third  Amhold  Karberg 

Loan   £200,000.00       6%         95         1917 

1918     Chinese  Ministry  of  War 

(Marconi         Wireless         ' 
Loan)     (In    effect    an 
advance    against    pur- 
chase)       £600,000.00      8%       par 

1910  Chinese  Government  7% 
P^ing-Hankow  Rail- 
way Redemption  Loan 
(Birchal  Loan) £450,000.00      7%       par       1920 


FOREIGN    LOANS    TO    CHINA  577 

AMOUNT  PRICE  TO 

DATS  NAME  OF  LOAN  OUTSTANDINO  EATB         CHINA        MATVBITT 

1912     Chinese  Government  Pe- 
king-Hankow       Ry. 
Redemption    Loan £150,000.00       7%         92         1920 

1917  Ministry  of  Communica- 
tions (Japanese  Group)   Yen  5,000,000.00     71^%  1920 

1917  2nd  Loan  to  Ministry 
of  Communications  (3 
Japanese   Banks) Yen  20,000,000.00     7%%  1920 


TAXES  ON  TITLE  DEEDS 

AMOUNT  PRICE  TO 

DATB  NAME  OF  LOAN  OUTSTANDING  RATE  CHINA        HATURITT 

1913     First      Austrian      Loan 

( Arnhold  Karberg  and 

Co.)     £1,200,000.00       6%         92         1918 

1913     Second     Austrian    Loan 

(Arnhold  Karberg  and 

Co.)     £2,000,000.00       6%         92         1918 

1913     Third  Arnhold   Karberg 

Loan    £300,000.00       6%         95         1918 


INDUSTRIAL  SECURITIES 
(i.  e.  properties  and  revenues) 

AMOUNT  PRICE  TO 

DATB  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATURITT 

1913    Chinese  Government  5% 

Industrial   Gold   Loan  £4,000,000.00       5%         84         1964 

1917  Kwangtung      Provincial 

Government  ( Japanese 
syndicate )  (Cement 
factory)     Yen  3,000,000.00       8%         96         1919 

1918  Central    Government    of 

China  (Mitsui  Bussan 
Kaisha)  (Bureau  of 
Engraving  and  Print- 
ing)          Yen  2,000,000.00       8%         98         1921 

37 


578      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 


TOBACCO  AND  WINE  TAXES 

AMOUNT  PBICB  TO 

DATS  NAME  OF  LOAN  OUTSTANDINO  RATK         CHINA        MATURITY 

1908  iPeking-Hankow  Redemp- 
tion Loan  ( Banque 
L'l  n  d  o  Chine    and 

Hongkong  and  Shang-  5%  and 

hai   Bank) £5,000,000.00     4%%     98         1938 

1913  Chinese  Government  In- 

dustrial 5%  Gold  Loan 
( Pukow  Port  Contract ) 
(Banque    Industrielle) Frs  100,000,000.00       5%         84         1964 

1914  Ching-yu    Railway    Con- 

tract (Banque  Indus- 
trielle)     Frs  600,000,000.00       5%       89%       1964 

1919  Continental  and  Com- 
mercial Trust  and 
Savings   Bank   Loan ..  U.S.  $5,500,000.00       6%  1922 

1918  Arms  and  Munitions 
Loan  (Exohange  Bank 
of  China)     Yen  20,000,000.00       8% 

1918     Canton       Government 

(Bank  of  Taiwan)  . .  .        Yen  800,000.00  1919 

( ?)      Political    Loan Yen  2,000,000.00 


LAND  TAXES 

AMOUNT  PRICB  TO 

DATE  NAME  OF  LOAN  OUTSTANDINO  RATI         CHINA        MATUBtTT 

1914  Italo-Belgian  Loan  or 
Conversion  5%  Loan 
( Banque  de  Pate  Laon, 
Belgium)    £100,000.00      5%  1919 


PAWNSHOP  AND  SILVER  TAXES    (Canton) 

AMOUNT  PRICB  TO 

DATE  NAME  OF  LOAN  OUTSTANDINO  RATE         CHINA        MATURITY 

1910    Canton    Government Yen  1,000,000.00       6% 


FOEEIGN   LOANS    TO    CHINA 


57D 


STAMP  TAXES 


DAT!  KAME  OF  LOAN 

1913     Third    Austrian    Loan.. 

1916  Austrian    Postponement 

Loan  (Conversion  of 
3  Austrian  Loans.  See 
under  Tax  on  Title 
Deeds)     

1917  Grand  Canal  Loan  (part 

of  Siems-Carey  Loan) 


AMOUNT 
OUTSTANDING 


PRICB  TO 
CHINA 


£500,000.00       6%         92         1917 


£1,233,000.00 
U.S.  $700,000.00 


8% 


8% 


92 


1920 


HANYEHPING  COAL  AND  IRON  COMPANY 

Note.     In  the  treaty  of  May,  1915  the  Chinese  Government  a^eed  not  to  pledge  thit 
security  to  interests  other  than  Japanese  nor  to  confiscate  same. 

AMOUNT  PRICB  TO 

DATE                              NAME  OF  LOAN                                         OUTSTANDING             RATE         CHINA  MATURITT 

1903     Industrial   Bank   of   Ja- 
pan         Yen  3,000,000.00       6%  1933 

1906    Mitsui  Mining  Co Yen  1,000,000.00    7%%  senai-annual 

1906     Okura    and    Co Yen  2,000,000.00     7%%  1913 

1908     Yokohama  Specie  Bank.     Yen  1,500,000.00     7%%  1918 

1908  Yokohama  Specie  Bank.        Yen 500,000.00     T^%  1918 

1909  Yokohama  Specie  Bank.     Yen  6,000,000.00     7%%  1919 

1910  Mitsui  Mining  Co Yen  1,000,000.00       7%  1912 

1912  Mitsui  Mining  Co Yen  2,000,000.00       7%  1914 

1913  Yokohama  Specie  Bank.  Yen  15,000,000.00  7%-6%  1953 
1913     Nanking    Provisional 

Government    Yen  2,000,000.00      7%  1914 


MINES 
(Tin,  copper,  iron,  etc.,  exclusive  of  Hanyehping) 


AMOUNT 
DAT!  NAME  OF  LOAN  OUTSTANDING 

1913     Provincial       Banks       of 

( ?)  Himan      and      Hupei 

(Hsiang  Pi  Shan  Iron 

Mine)    Yen  2,000,000.00 

1913    Yunnan     Government 
(?)           (Government   revenue 
from    Ko     Chiu    Tin 
Mine)     Yen  3,000,000.00 


PRIOB  TO 
CHINA 


580      FOKEIGN  RIGHTS  AND  INTERESTS  IN  CHINA 


DATB 

1915 
(T) 

NAME  OF  LOAW 

Central    Government    of 
China    (Feng    Huang 
Shan  Iron  Mines) 

AUOUKT 
OVTSTANDINa 

. .  .     1,000,000.00 

run  TO 

lUTB         CHUrx 

1915 

Central    Grovemment    of 
China   (Mines  in  Hu- 
nan and  Anhui) ...... 

Yen  5,000,000.00 

6%         94 

1918 
1918     Tan     Hao-ming      (Rebel 

Grovemor    of    Hunan) 

(Iron    mines    at    Tai- 

pingshan    in    Anhui 

and   the   Shuikoushan     Yen  2,000,000.00  or 

mines  in  Hunan) 2,500,000.00       7%         94         1923 

1918     Fengtien  Province  ( Stock 

in     Penhsihu   Colliery 

owned  by  Province)  . .   Yen  20,000,000.00 
1918     Fengtien  Province  ( Stock 

in  Penhsihu  Colliery) 

(Redemption  of  small  1920  or 

coin  notes)    Yen  3,000,000.00     6%%       95         1921 

1918     Kiangsi     Province     (Yu 

Kan     Iron     Mines)..     Yen  3,000,000.00 
1918     Central      €rovernment. 

(Mines  in  Kuangtung 

Province)      (Okura)  . .     Yen  2,000,000.00 
1918     Kirin      Forestry      Loan 

(Gold  Mines  in  Kirin 

and    Heilungkiang)...  Yen  30,000,000.00     7%%      par        1928 

1918     Yimnan     Province      (cf. 

above)     (Rev.    of    Ko 

Chiu   Tin   Mine) Yen  3,000,000.00 

1918     Tsao    Kim    Government 

of      Chihli      Province 

Kailan  Mine  shares..     Yen  1,000,000.00 

NATIVE  CUSTOMS  REVENUE 

AMOUNT  PRICE  TO 

DATB  NAME  OF  LOAN  OUTSTANDING  RATE  CHINA        MATURITY 

1902     Boxer    Indemnities £61,565,182.00       4%  1940 

1917  Central  Government  (Re- 
lief for  Chihli  Flood 
sufferers)     Yen  5,000,000.00       7%        par        1918 


DOMESTIC    LOANS    OP    CHINA  581 


CABLES,  TELEGRAPHS  AND  TELEPHONES 

AMOUNT  PRICE  TO 

DATK  KAME  OP  LOAN  0UT8TANDINQ  KATE         CHINA         IfATURITT 

1900  Anglo-Danish    Telegraph 

Loan   (Shanghai  Taku 

cable)     £210,000.00       5%  1930 

1901  Anglo-Danish    Telegraph 

Loan      ( Chefoo     Taku 

cable)     £48,000.00       5%  1930 

1911  Telegraph  Loan  by  East- 
em  Extension  and 
Great  Northern  Tele- 
graph   Co £500,000.00       5%        par        1947 

1918     Telegraph      Administra- 
tion (Chinese  telegraph  7V2  or  98%  or 
lines   and  property)..   Yen  20,000,000.00       8%        par        1923 

1918  Canton  Branch  Bank  of 
China  (Bank  of  Tai- 
wan )  ( Canton  Tele- 
phone   Exchange) Mex.    $500,000.00     7%% 

1918     Wireless    Loan     (Mitsui     Yen  3,000,000.00  or 

and  Co.) 5,000,000.00     7^^% 

SECURITY  UNKNO^VN 

AMOUNT  PRICE  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  KATE  CHINA        MATURITT 

(?)  Loan    to   Hankow   Mint  Yen  2,000,000.00 

1916  Kuangtung       Provincial 

Government    Yen  600,000.00 

1916     Shantung  Province Yen  1,500,000.00 

1916     Hankow  Paper  Mill Yen  2,000,000.00 

1916  Tientsin  Spinning  Mill.  Yen  600,000.00 

1917  Hankow  Hydraulic  Elec- 

tric   Co •  Yen  1,000,000.00 

1917     Nanchang  Railway  Loan     Yen  2,000,000.00 

1917     Shantung    Loan Yen  1,500,000.00 

(  ? )  Japanese  Loan  to  Min- 
istry of  Communica-  > 
tions  to  enable  it  to 
repay  certain  indem- 
nities to  the  Ministry 
of  Finance  and  to  pro- 
vide funds  for  the 
railway  administration          £1,000,000.00 


582      FOREIGN  RIGHTS  AND  INTERESTS  IN  CHINA 

XMOUHT  PRICl  TO 

DATS  NAHK  Or  LOAN  OUTSTANDING  RATE          CHINA        IfATOSRT 

1917  Li8t  pub.  hj  Far  Eastern 

Review,  Aug.   1918...  4  small  loans. 

1918  Supplementary  loan  for 

Kirin-Changchun  Bail- 
way    Yen  630,000.00 

1918    Central  Government  ( Pur- 
chase of  Arms) Yen  14,000,000.00      7%       95^ 

1918     C5hihli    Provincial    Loan    Yen  1,000,000.00 

1918     Arms    and    Ammunition 

Loan    Yen  20,000,000.00 


DOMESTIC    LOANS    OF   CHINA  583 


DOMESTIC  LOANS  OF  CHINA  CLASSIFIED  ACCORDING 
TO  THEIR  SECURITY 


CUSTOMS  REVENUE 

AMOUNT  PRICl  TO 

DATB  NAME  OF  LOAK  OUTSTANDING  RATE         CHINA        HATUKITT 

1918  7th  year  Domestic  Loan 
(Payable  from  month- 
ly instalments  released 
by  Maritime  Customs 
of  deferred  Boxer  In- 
demnity)       Mex.$48,000,000.00      6%        par        1923 

RAILWAYS,  PROPERTY  REVENUE 

AMOUNT  PEICB  TO 

DATS  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATURITY 

1914    3rd  Domestic  6%  Loan.Mex.$24,000,000.00       6%         90         1923 

LIKIN 

AMOUNT  PRICE  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA         MATURITY 

1914     3rd  Domestic  Loan Mex.f20,000,000.00       6%        par        1927 

OCTROI 

AMOUNT  PRICE  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATURITY 

1914     2nd  Domestic  6%  Loan .  Mex.$24,000,000.00       6%         90         1923 
WINE  AND  TOBACCO  TAX 

AMOUNT  PRICE  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATURITT 

1916  Republic   of    China    6% 

Gold  Treasury  NotesL  Mex.  $5,000,000.00      4%  1919 

1917  Chinese  Government  6% 

Internal    Loan .  .  betw.  Mex.$5,000,000.00  and 
$6,000,000.00 

LAND  TAX 

AMOUNT  PIUO«  TO 

DATE  NAME  OF  LOAN  OUTSTANDING  RATE         CHINA        MATURTTT 

1912    Nanking     8%     Military 

Loan    Mex.  $6,367,640.00  1920 


684      FOREIGN  EIGHTS  AND  INTERESTS  IN  CHINA 


NATIVK  CUSTOMS 


NAME  OF  LOAN 


AMOUNT 
OUTSTANDISG 


PBICB  TO 
RATE          CHINA        MATURITY 


1924 


1915     3rd  Domestic  6%  Loan .  Mex.$24,000,000.00 
1918     7th  Year  Domestic  Loan 

of  Republic  of  China .  Mex.$45,000,000.00       6%        par        1922 


STAMP  TAX 


NAME  OF  LOAN 


AMOUNT 
OUTSTANDING 


PEICB  TO 
RATE  CHINA        MATURITY 


1912     1st    Domestic    6%    Pub- 
lic Loan Mex.  $4,006,920.00       6% 


1947 


TITLE  DEEDS 


NAME  OF  LOAN 


AMOUNT 
OUTSTANDING 


PRICE  TO 
RATE          CHINA        MATURITY 


1912     1st    Domestic   6%    Pub- 
lic Loan Mex.  $4,006,920.00       6% 


1947 


CHINESE    NATIONAL   REVENUES  585 


SCHEDULE  OF  CHINESE  NATIONAL  REVENUES 


Based   upon   estimates   and    statistics    contained   in    Chu    Chi-chien's    yjro- 

posed   plan   for   reorganization    in    China   submitted   to    the 

Chinese  peace  conference  sitting  at  Shanghai,  1919 ' 

REVENUE  1915  1916  1917 

Customs    HK  Tls  36,740,000       Tls  37,760,000    Tls  38,180,000 

It  is  estimated  revised 
tariff  will  make  this 
HK  Tls.  73,000,000. 
Tax  on  Commodities. 
This  tax  includes  doubt-  1 

less,    Likin,    Destina-     [►$33,700,000  $39,400,000  $33,700,000 

tion  Tax,  etc.  J 

Salt    $80,459,007  $82,704,689  $80,287,306 

Taxes  on  Title  Deeds.  . .   Estimated  for  the  fiscal  year  1918-19     $3,13.3,165 
Peking  Octroi 


Mining  Tax Estimated  for.  the  fiscal  year  1918-19        $876,802 

Land    Taxes $75,775,942  $81,937,041  

Stamp  Tax Estimated  for  the  fiscal  year  1918-19     $6,525,000 

Native    Customs $7,420,000  $7,160,000  $6,000,000 

Tobacco  and  Wine  Taxes        Estimated  receipts  for  the  fiscal  year  1918-19. 

Licenses     $2,039,852 

Tax    5,673,931 

Additional    Tax 3,506,500 

Monopoly    12,134,986 


*  See  Far  Eastern  Review,  June,  1919. 


INDEX 


Administrative  Integrity  of  China, 
264. 

Administrative  Ordinances  in  Set- 
tlements and  Concessions,  214. 

Advisers  in  China,  265. 

Aglen,  Sir  F.  A.,  137. 

American  Note  of  June,  1917,  447. 

American  Treaty  of  1903,  20. 

American  Treaty  of  1844,  20,  48. 

Amherst,  mission  of,  102. 

Amoy,  Japanese  police  boxes  in,  81; 
treaty  port,  103. 

Amur  Region,  annexed  by  Russia, 
288. 

Anglo- Japanese  Alliance,  258,  301, 
329. 

Annam,  lost  by  China,  267;  fron- 
tier trade  with,  152. 

Antung,  customs  at,  147. 

Antung-Mukden  Railway,  312,  338. 

Arms  Contract,  423. 

Arms  and  Ammunition,  importa- 
tion of,  prohibited,  120. 

Amhold,  Karberg  &  Co.,  loan  by, 
507. 

Arnold,  Julean,  quoted,  188. 

Arrests,  by  Chinese  oflScials,  65  et 
seq. 

Asakawa,  K.,  cited,  288  n. 

Assessors,  in  Chinese  courts,  52. 

Banks,  foreign,  as  financial  agen- 
cies in  China,  485. 

Banque  du  Nord.  See  Russo-Asi- 
atic  Bank. 

Barton,  Sidney,  quoted,  58. 

Berthemy  Convention,  201-202. 

Bills  of  Lading,  taxed,  130. 

Bland,  J.  O.  P.,  cited,  292  n. 


Boat  Taxes,  129. 

Boxer  Indemnities,  493  et  aeq. 

British  Sphere  of  Interest,  281   et 

seq.;    railway    concessions,    282; 

Russian  agreement  of  1899,  283. 
British  Supreme  Court  for  China, 

35  et  seq. 
Burma,  annexed  by  Great  Britain, 

268 ;  frontier  trade  with,  149. 

Canton-Kowloon  Railway,  539. 
Carey,  W.  F.,  quoted,  4. 
Carr,  L.,  136. 

Casini  Convention,  288  et  seq. 
Changchun-Kirin  Railway,  313. 
Changsha,  115  n. 
Chefoo,  Settlement  at,  218. 
Chefoo  Convention,  22  n.,  115,  467. 
Chengchiatun    Incident,    85;    Japa- 
nese demands,  347  et  seq. 
Chengtinfu-Taiyuanfu  Railway,  537. 
Cheseborough  Co.,  case  of,  176. 
Chicago  Bank  Loan,  508. 
Chientao,  status  of  Koreans  in,  26. 
Chinchow-Tsitsihar    Railway,     318, 

321.      See  Neutralization  of  Man- 

churian  Railways. 
Chinchow-Aigun  Railway,  322. 
Chinese  Circular  of  1878,  11,  42  n. 
Chinese   Eastern   Railway,   frontier 

trade  along,  149;   status  of,  292 

et  seq. 
Chinese  Employees,  arrest  and  trial 

of,  26. 
Clm,    Dr.    Chin,    quoted,  "  122,    126, 

133;  cited,  135. 
Coal   Mines,   Fushun    and   Yengtai, 

367  et  seq.;  see  Hangyehping. 
Cobbett,  Pitt,  quoted,  271,  272. 


687 


588 


INDEX 


Co-Hong,  abolished,  105. 

Commerce.  See  Foreign  Commerce; 
Customs. 

Companies  Act,  British,  revision  of, 
189. 

Concessions,  at  Treaty  Ports,  208 
et  seq.;  classes  of,  271. 

Consortium,  proposed  new,  511  et 
seq.;  Six  Power,  499;  American 
withdrawal,  500. 

Consular  Agents,  establishment  of, 
in  China,  105. 

Consular  Courts,  28  et  seq.;  Ameri- 
can statutory  provisions,  29,  88 
et  seq. 

Consumption  Taxes,  128,  129. 

Converts,  Chinese,  to  Christianity, 
293. 

Continental  Trust  and  Savings  Bank 
of  Chicago,  508. 

Copyrights,  169  et  seq. 

Corporations,  foreign,  in  China,  181 
et  seq.;  Chinese,  foreign  share- 
holders in,  185;  taxation  of,  187. 

Crisp  Loan,  497. 

Currency  Loan  of  1911,  494. 

Cushing,  Caleb,  quoted,  15. 

Customs,  schedules  of,  103;  rates  of, 
117;  free  list,  119;  Regulations, 
152  et  seq.;  in  Kiaochow,  235. 
See  Inspector  General;  Maritime 
Customs;  Native  Customs;  Fron- 
tier Trade. 

Dairen,  customs  at,  144.     See  Liao- 

tung  Peninsula. 
Dalny.     See  Liaotung  Peninsula. 
Dane,    Sir   Richard,   reorganization 

of    Salt    Administration,    505  n., 

122  n. 
Debts,  China's  public,  483  et  seq.; 

classification  of,  487. 
Deeds.     See  Landholdings. 
Deep  Bay,  lease  of,  239. 
Denby,  Hon.  Charles,  cited,  188. 


Denby,  American  Minister,  quoted, 

199,  206. 
Destination  Taxes,  126. 
Dillon,  E.  J.,  quoted,  231. 
Diplomatic  Corps,  establishment  of, 

at  Peking,  108. 
Dongdang,  railway  to  Lunchow,  277. 

Eagle  Brand  Condensed  Milk,  imi- 
tation of,  180. 

Eastern  Inner  Mongolia,  457  et  seq. 
See  Mongolia. 

Extraterritoriality,  13  et  seq.,  110; 
basis  of,  16  e*  seq.;  prot6g6s,  24; 
law  enforced,  41  et  seq.;  disad- 
vantages of,  70  et  seq.;  possible 
abolition  of,  75  et  seq.;  argument 
of  Chinese  at  Paris,  76;  police 
boxes,  80;  in  leased  areas,  242  et 
seq.;  Japanese  demands  for,  in 
Manchuria,  343. 

Extraterritorial  Courts,  27  et  seq. 

Favored  Nation  Clause.  See  Most 
Favored  Nation. 

Ferguson,  J.  C,  quoted,  432  n. 

France,  lease  of  Kuangchouwan, 
238;   sphere  of  interest,  273. 

Free  List,  119. 

French  Settlement  at  Shanghai,  64. 

Foochow,  treaty  port,  103. 

Foreign  Corporations.  See  Corpor- 
ations. 

Foreign  Commerce,  102  et  seq. 

Forestry  Loan,  363. 

Frontier  Trade,  with  Russia,  148; 
with  Burma  and  Indo-China,  149, 
276;  China  desires  abolition  of, 
150  et  seq. 

Fukien,  Japanese  interest  in,  411; 
police  boxes  in,  81. 

Fushun  Coal  Mines,  367. 

Garrisons,  foreign,  in  China,  221. 
General  Regulations  of  1843,  110. 


INDEX 


589 


Grermany,  lease  of  Kiaochow,  228; 
rights  and  interests  in  China, 
285,  371  et  acq. 

Girard,  A.,  cited,  232,  291. 

Gold  Mining  Loan,  363. 

Great  Britain,  lease  of  Kowloon, 
Mirs  Bay  and  Deep  Bay,  239; 
lease  of  Weihaiwei,  240. 

Grey,  Sir  Edward,  quoted  as  to  Ja- 
pan's special  interests,  445. 

Hague   Opium   Conferences,   473   et 

seq. 
Hainan,  non-alienation  of,  276. 
Hangyehping  Iron  Works,  415. 
Hankow,  Settlements  at,  209. 
Harbin,  Russian   political  jurisdic- 
tion in,  306  et  seq. 
Harriman-Ito    Railway    Agreement, 

310. 
Hart,  Sir  Robert,  72  n.,  137,  156. 
Hay,  Secretary,  Open-Door  circular, 

246  et  seq. 
Herod.    Favored  Nation  Treatment, 

quoted,  9. 
Hinckley,  F.  E.,  quoted  18  n.,  201; 

cited,  13  n. 
Hoomim-Chai   Treaty,    11. 
Hornbeck,  S.  K.,  quoted,  9,  144  n., 

421;  cited,  443  n. 
Hsinmintim-Fakumen  Railway,  313. 
Hsinmintim-Mukden    Railway,    355. 
Huai  River  Conservancy  Loan,  566. 
Hukuang  Loan,  550  et  seq. 
Hulutao,  port  of,  359. 

Ichowfu,  railway  to,  371. 

Hi    Convention    of    1881,    151. 

Indo-China,    lost    by    China,    267; 

frontier  trade  with,  149. 
Influence,  Spheres  of.     See  Spheres 

of  Influence. 
Inland  Navigation,  108,  161  et  seq. 
Inland  Waters,  foreign  warships  on, 

166. 


Interest,  Spheres  of.     See  Spheres 

of  Interest. 
Interior,  Missionaries  in,  199 ;  travel 

in,  110;  warehouses  in.  111.     See 

Passports. 
Inspector-General  of  Maritime  Cus- 
toms.   See  Maritime  Customs. 
International       Settlement.         See 

Shanghai. 
International  Postal  Union,  China's 

adherence  to,  156. 
Ishii,  Viscoimt,  quoted,  449  n. 
Italy,  lease  of  Sanmen  Bay  refused, 

242. 

Japan,  alliance  with  Great  Britain, 
301 ;  declares  war  on  Russia,  302 ; 
position  of,  in  Shantimg,  380  et 
seq.;  claim  of  sphere  of  interest 
in  Fukien,  411.  See  Manchuria; 
Eastern  Inner  Mongolia;  Twenty- 
One  Demands. 

Japanese  Loans,  negotiated  by  pseu- 
do-ofl5cial,  6. 

Japanese  Treaty  of  1895,  110; 
Treaty  of  1903,  108. 

Kaomi,  German  troops  withdrawn 
from,  234,  236. 

Kawakami,  K.  K.,  quoted,  351. 

Kent,  P.  H.,  quoted,  524  n. 

Kiaochow,  customs  at,  141  et  seq.; 
lease  of,  to  (Jermany,  228;  Ger- 
man troops  withdrawn  from 
Chinese  city  of,  234,  236.  See 
Tsingtao. 

King,  Gerald,  quoted,  120,  125,  139, 
155;  cited,  135  n. 

Kirin-Hueining   Railway,    362. 

Kirin-Changchun  Railway,  337,  355. 

Kirin  Mining  and  Forest  Loan,  521. 

Knox,  Secretary,  neutralization 
scheme,  316  et  seq. 

Koo,  V.  K.  W.,  quoted,  14,  18  n., 
23,  45,  207;  cited,  13  n.,  20. 


590 


INDEX 


Korea,  trade  between,  and  Manchu- 
ria, 148;  American  guarantee  to, 
364  n. 

Koreans,  status  of,  in  Chientao,  26. 

Kowloon,  lease  of,  239. 

Kuangchouwan,  lease  of,  238;  rail- 
way from,  279. 

Kwangsi,  mines  in,  277. 

Kwangtung,  mines  in,  277. 

Landholding,  192  et  seq.;  modes  of 
acquiring  title,  195  et  seq.;  in 
Concessions  and  Settlements,  210 
et  seq. 

Lansing-Ishii  Agreement,  429  et  seq. 

Lansing,  Secretary,  testimony  be- 
fore U.  S.  Senate  Committee,  437 
et  seq. 

Laokai-Yunnanfu  Kailway,  280. 

Lay,  H.  N.,  136. 

Latter,  A.  M.,  quoted,  52,  72,  74. 

Law,  Chinese  administration  of,  68; 
sources  of,  enforced  in  American 
courts,  48  et  seq. 

Leased  Areas,  228  et  seq. 

Lee,  Higginson  and  Co.  Loan,  508. 

Legation  Quarter  at  Peking,  219. 

Liaotung  Peninsula,  lease  of,  236. 

Li,  C.  C,  case  of,  66. 

Li  Hung-chang-Lobanoff  Treaty,  291. 

Likin,  120  et  seq. 

Lin  Tse-su,  Commissioner,  464. 

Loans,  Chinese,  483  et  seq.;  Franco- 
Russian  of  1895,  488;  Anglo-Ger- 
man of  1896,  490;  Anglo-G«rman 
of  1898,  491;  Boxer  Indenmities, 
493;  Currency  of  1911,  494; 
Crisp,  497;  Six  Power  Consor- 
tium, 499;  Reorganization  of 
1913,  502;  Belgian  of  1912,  506; 
Austrian  of  1912,  507;  Amhold, 
Karberg  &  Co.,  507;  Lee,  Higgin- 
son &  Co.  of  1916,  508;  Chicago 
Bank  of  1916,  508;  Japanese, 
1917-1919,     509;     Industrial     of 


1913,  520;  Banque  Industrielle  of 

1914,  520;  Kirin  Mining  and  For- 
est of  1918,  521;  War  Participa- 
tion of  1918,  522;  Telegraph  of 
1918,  523;  Plague  Prevention  of 
1918,  523;  Siems-Carey  Conces- 
sions, 562;  Shantung  Canal  Im- 
provement, 566;  Huai  River  Con- 
servancy, 566.  ,;See  Railway 
Loans. 

Lobanoff-Li  Hung-chang  Treaty  of 

Alliance,  291. 
Lobingier,  Judge,  suggestion  as  to 

Chinese     Appellate     Court,     59; 

quoted,  51. 
Lo-ti  chuan,  129. 
Lungkow,      landing      of     Japanese 

troops  at,  382. 

Macao,  annexed  to  Portugal,  268. 

MacCartney  Mission,  102. 

Macdonald  &  Anderson,  case  of, 
46  n. 

Mackay  Treaty,  108,  109,  131. 

MacMurray,  J.  V.  A.,  quoted,  413, 
484  n. 

Manchuria,  Japanese  police  boxes 
in,  82;  trade  between,  and  Korea, 
148;  landholding  in,  196;  extent 
and  status  of,  216;  Japanese  in, 
310  et  seq.;  new  consortium  and, 
516.  See  South  Manchuria.  Chi- 
nese Eastern  Railway,  Twenty- 
One  Demands. 

Manufacturing  in  China  by  foreign- 
ers, 111. 

Maritime  Customs,  receipts  of 
pledged,  112;  administration  of 
135  et  seq.;  at  Tsingtao,  383. 

Merchants,  foreign,  right  of,  in 
China,  110  et  seq. 

Military  Agreement  of  1911,  Sino- 
Japanese,  422. 

Millard,  T.  F.,  quoted,  354,  431  n., 
449  n. 


INDEX 


5iJJ 


Mines,  in  Yunnan,  Kwangsi  and 
Kwangtung,  277;  in  Manchuria, 
334,  344,  354,  356;  in  Shantung, 
376. 

Mining  corporations,  185. 

Mirs  Bay,  lease  of,  239. 

Missionaries,  landholdings  by,  193; 
special  rights  of,  197  et  seq.; 
Japanese  ask  for  right  of  propa- 
ganda, 420. 

Mixed  Courts,  51  et  seq.;  reform  of, 
67  et  seq.  See  Shanghai  Mixed 
Courts. 

Mongolia,  451  et  seq.,  516.  See  East- 
ern Inner  Mongolia;  Twenty-One 
Demands. 

Monroe  Doctrine,  Japan's  Asiatic, 
442. 

Morse,  H.  B.,  quoted,  26,  55,  113, 
121,  134, 153  n.,  157  n.,  204,  205  n., 
218,  223,  225,  230,  464,  467  n., 
cited,  13  n.,  17,  135  n.,  139  n.,  228. 

Most  Favored  Nation  Clause,  8  et 
seq.;  U.  S.  doctrine  of,  9;  pro- 
vision of  "  Declaration  "  of  1843, 
109  n. 

Mukden,  Japanese  political  jurisdic- 
tion in,  309. 

Myer's  General  History.  See  Copy- 
right. 

Xanking,  Treaty  of,  19,  103  et  seq., 
464. 

Xanning,  railway  to  Pese,  277. 

Xative  Customs,  154  et  seq. 

Navigation.  See  Inland  Naviga- 
tion. 

Neutralization  of  Manchurian  Rail- 
ways, Knox's  plan  for,  316  et  seq. 

Newchwang,  customs  at,   147. 

Xganking,  115  n. 

Ningpo,  treaty  port,  103. 

O'Connor  Convention,  267. 
Okiuna,  Count,  message  to  Ameri- 
can people,  381. 


Open  Door,  Secretary  Hay's  circu- 
lar, 245  et  seq.;  reafl&rmations  of, 
by  the  Powers,  251  et  seq.; 
treaties  affirming,  253  et  seq.; 
Root-Takahira  Agreement,  257 ; 
Anglo- Japanese  Alliance,  258 ; 
special  interests  and,  259. 

Opium,  463  et  seq.;  American  trade, 
468;  Anglo-Chinese  Agreement  of 
1907,  470;  International  Shang- 
hai Commission,  471;  Hague  Con- 
ferences, 473  et  seq.;  Versailles 
Treaty,  478;  Combines,  473; 
smuggling  by  Japanese,  480. 

Opium  Wiar,  19,  102. 

Overlach,  quoted,  260,  280,  286,  296. 

Pakhoi,  railroad  to,  279. 

Passports,  for  interior,  108. 

Patent  Rights,  169  et  seq. 

Pauling  &  Co.,  loan  agreements 
with,  560. 

Peace  Conference  at  Paris,  396  et 
seq. 

Peace  Treaty  of  Versailles,  provi- 
sions relating  to  China,  401  et 
seq.;  China  refuses  to  sign,  405. 

Peking,  establishment  of  diplomatic 
corps  at,  108;  not  a  treaty  port, 
117;  Legation  Quarter  at,  219. 

Peking-Hankow  Railway,  282,  535. 

Peking-Kalgan  Railway,  531. 

Peking-Mukden  Railway,  526. 

Peking-Siuyuan  Railway.  See  Pe- 
king-Kalgan   Railway. 

Peking  Syndicate  Railway,  559. 

Pienlo  Railway,  538. 

Piggott,  Sir  F.,  cited,  13  n. 

Police  boxes,  Japanese,  80  et  seq. 

Port  Arthur.  See  Liaotung  Penin- 
sula. 

Port   Arthur-Harbin   Railway,   297. 

Ports,  foreign  surveys  of,  167. 

Ports  of  Call,  115. 


392 


INDEX 


Portsmouth  Treaty,  affirms  open 
door,  256;  provisions  of,  303,  810. 

Portugal,  annexes  Macao,  268. 

Poshan  Coal  Fields,  372,  376. 

Post  Office,  Chinese,  137, 156  e*  seq.; 
foreign,  157. 

Prot6g6s,  Levant  system  of,  not 
recognized  in  China,  24. 

Railways,  Antung-Mukden,  312; 
Chinchow-Aigim,  327;  Chinchow- 
Tsitsihar,  318;  Chefoo-Weihsien, 
375;  Dongdang-Lungchou,  277; 
Hailung-Kirin,  358;  Hsinmintim- 
Fakumen,  313;  Hsinmintim-Muk- 
den,  355;  Jehol-Taonanfu,  358; 
Kaiyuan-Hailungchen,  358;  Kiao- 
chow-Tsinanfu,  371,  374;  Kirin- 
Changchun,  355;  Kirin-Hueining, 
362;  Koami-Ichowfu,  374,  393; 
Laokai-Yunnanfu,  280;  Nanning- 
Pese,  277;  Port  Arthur-Harbin, 
297 :  Shanhaikuan  -  Xewchwang, 
283  n.;  Ssupingkai  -  Taonanfu, 
358;  Tonking-Yunnanfu,  278; 
Kuangchouwang-Onpu,  279 ;  Tsi- 
nan-Peking-Hankow,  374 ;  Tsin- 
ing-Kaifengfu,  375 ;  Tsinanfu- 
Shuntehfu,  375,  393.  See  Rail- 
way Loans. 

Railway  guards,  297. 

Railway  Loans,  control  conditions, 
524;  Canton-Hankow,  549;  Can- 
ton-Kowloon,  539 ;  Chengtingfu- 
Taiyuanfu,  537;  Hukuang  Loan, 
550  et  seq.;  Peking-Kalgan,  531; 
Peking-Mukden,  526;  Peking  Syn- 
dicate or  Tao-Ching,  559 ;  Peking- 
Hankow,  535;  Pienlo,  538;  Regu- 
lations of  1898,  538;  Shanghai- 
Hangchow-Ningpo,  547 ;  Shanghai- 
Nanking,  532 ;  Shanghai-Woosung, 
526;  Shasi-Shingyi,  560;  Siems- 
Carey,  562. 

Rea,  G.  B.,  quoted,  340,  565  n. 


Real  Estate,  law  applied  in  extra- 
territorial courts,  46  et  seq. 

Reorganization  Loan  of  1913,  502. 

Residential  Areas  at  Treaty  Porta, 
208  et  seq. 

Richards  &  Richards,  case  of,  34  n. 

Root-Takahira  Agreement,  267,  315, 
435. 

Ross,  In  re,  quoted,  34. 

Russia,  claim  upon  Kiaochow,  231; 
agreement  of  1899  with  Great 
Britain,  283;  frontier  trade  with 
China,  148;  early  treaties  with 
China,  13  n.,  102  n.;  lease  of 
Liaotung  Peninsula,  236. 

Russian  Ambassador  to  Japan,  let- 
ters of,  quoted,  445. 

Russian  Sphere  of  Interest,  286  et 
seq.  See  Manchuria;  Chinese 
Eastern  Railway. 

Russo-Chinese  Agreement  of  1899, 
322. 

Russo-Asiatic  Bank,  296.  See  Russo- 
Chinese  Bank. 

Russo-Chinese  Bank,  293,  396. 

Russo-Japanese  Agreement  of  1907, 
314. 

Russo-Japanese  Treaty  of  July  4, 
1910,  328. 

Russo-Japanese  Treaty  of  July  3, 
1916,  350;  secret  military  alli- 
ance, 352. 

Salt,  importation  of,  prohibited, 
120;  administration  of  tax  to  be 
reorganized,  504. 

Sanmen  Bay,  lease  of,  asked  by 
Italy,  242. 

Sinkiang,  462. 

September,  1918,  agreements,  393. 

Settlements,  at  Treaty  Ports,  113, 
208  et  seq.;  Chinese  sovereignty 
reserved,  211;  classes  of,  217. 

Seward,  G.  F.,  quoted,  42,  68. 


INDEX 


593 


Shanhaikuan-Newchwang  Railway, 
283  n. 

Shanghai,  International  Mixed 
Court  at,  55  et  seq.;  treaty  port, 
103;  landholding  in,  210;  settle- 
ments at,  225. 

Shanghai  -  Hangchow  -  Ningpo  Rail- 
way, 547. 

Shanghai-Nanking  Railway,   532. 

Shanghai  Opium  Commission,  471. 

Shanghai  Tariff  Revision  Commis- 
sion, 118. 

Shanghai-Woosung  Railway,  526. 

Shantung,  German  rights  in,  371  et 
seq.;  mining  rights  in,  376;  com- 
mercial and  industrial  rights  in, 
377;  Japan's  position  in,  380  et 
seq.;  Japanese  demands  of  1915 
and  resulting  treaty  and  notes, 
386  et  seq.;  secret  agreements  of 
1917,  397;  President  Wilson  posi- 
tion regarding,  400;  Versailles 
Peace  Treaty,  401 ;  Japan's  prom- 
ise to  restore,  to  China,  406. 

Shantung  Canal  Improvement  Loan, 
566. 

Shantung  Eisenbahn  Gresellschaft, 
372. 

Shantung  Railway  Company,  376. 

Shasi-Shingyi   Railway,   560. 

Shimonoseki  Treaty,  110. 

Siems-Carey  Concessions,  562. 

Sikkim  Convention,  459. 

Sino-Japanese  Treaty  of  December 
22,  1905,  311,  312. 

Special  Interests,  259  et  .  seq.; 
Japan's,  in  China,  429  et  seq.; 
the  new  Consortium,  515. 

Spheres  of  Interest,  267  et  seq.;  de- 
fined, 270;  implications  of,  273 
et  seq. 

South  Manchuria,  foreign  rights  in, 
113. 

South  Manchuria  Railway,  364  et 
seq. 


Sovereignty,  China's  guaranteed, 
261. 

Ssupingkai  -  Chenchiatun  Railway, 
360. 

Stamp  Taxes,  130. 

Standard  Oil,  proclamation  protect- 
ing registered  brands  of,  175  n. 

Straight,  Willard,  quoted,  358. 

Supplementary  Treaty  of  1843,  20, 
110. 

Survey,  of  Chinese  ports  by  foreign 
war  vessels,  167. 

Taft,  President,  and  the  Hukuang 
Loan,  550. 

Takahira,  understanding  with  Root, 
315. 

Talienman.  See  Dairen;  Liaotung 
Peninsula. 

Tao-Ching  Railway,  559. 

Tariff.     See  Customs. 

Territorial  Integrity  of  China  Guar- 
anteed, 261. 

Tibet,  459  et  seq. 

Tientsin,  landholding  at,  194;  gar- 
risons at,  222 ;  concessions  at,  223. 
Tientsin  Treaties,  22,  107,  110. 

Tientsin-Chinkiang  Railway.  See 
Tientsin  Pukow  Railway. 

Tientsin-Pukow  Railway,  541. 

Tong,  HoUington  K.,  cited,  64  n. 

Tonking,  railway  to  Yunnanfu,  278. 

Trademarks,  169  et  seq. 

Transit  Taxes,  105,  120  et  seq.  See 
Likin. 

Trans-Siberian  Railway.  See  Chi- 
nese Eastern  Railway. 

Treaty  Ports,  103,  110,  112  et  seq. 

Tsingtao,  customs  at,  141  et  seq., 
283;  Japanese  concessions  at,  391. 

Turkestan,  462. 

Twenty-One  Demands,  police  boxes, 
82;  Manchuria,  330;  Shantimg, 
386;  Fukien,  411;  Mongolia,  457; 
Group  V,  418  et  seq. 


594 


INDEX 


Tyau,  M.  T.  Z.,  quoted,  116;  cited, 
11,  13  n.,  115  n. 

Uehida,  Viscount,  version  of  Shan- 
tung agreement  corrected  by  Presi- 
dent Wilson,  407. 

United  States,  treaty  of  1844,  20. 

United  States  C!ourt  for  China,  31 
et  seq.;  text  of  law  establishing, 
96  et  seq. 

Vaseline  Caae,  176. 

Villalobos,  American  gunboat,  167. 

Wade,  Thomas,  136. 

Waichow,  1 15  n. 

Wanhsien,  115  n. 

War,    declared    by    China    against 

Germany,   effect   of,   on   treaties, 

311. 
War  Participation  Loan,  395. 
Warships,  foreign,  on  inland  waters, 

166. 


Weale,  Putnam,  quoted,  5,  420; 
cited,  87,  350  n. 

Weihaiwei,  lease  of,  240,  378. 

Williams,  E.  T.,  quoted,  451. 

Wilson,  President,  position  regard- 
ing Shantung,  400;  corrects  Vis- 
count Uehida,  407. 

Woosung  River,  navigation  on,  110. 

Wu,  Dr.  C.  C,  quoted,  87. 

Yangtse  River,  navigation  on,  108, 
110,  161  et  seq.;  ports  of  call  on, 
115;  basin  of,  within  British 
sphere,  281;  Twenty-One  Demands 
and,  414. 

Yengtai  Coal  Mines,  367. 

Yoohow,  settlement  at,  218. 

Younghusband,  expedition  of,  460. 

Yunnan,  mines  in,  276. 

Yunnanfu,  railway  to  Tonking,  278; 
railway  to  Laokai,  280. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY,  LOS  ANGELES 

COLLEGE  LIBRARY 

This  book  is  due  on  the  last  date  stamped  below. 

REC'D  COL  Uu. 

-jtiui  11973 

r" 

^'^125  73  14DAY 
JUL  12  79  14  DAY 


22WJG79R£CCL 


Book  Slip — Series  4280 


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UCLA-Coltege  Ubrary 

jx  1570  west 


L  005  773  378  4 


COtlEGE 
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In  iilll  Hill  lllli  Hill  lllil 


A     001  042  473     7 


